re: Friend gave his daughter $275k when she graduated college.

quote:

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Great idea, but going to be one hell of a tax bill. Hope he talked to an accountant about how to do this over the entire time period to reduce the taxes

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Care to elaborate?

Unless he and his wife are worth more than $24 million (doesn't sound that way), he doesn't have to worry about estate or gift taxes.

If you're talking about income taxes, if he gifted the underlying stock account that appreciated over time, then sure, she'll have to pay capital gains tax when she takes it out. BUT, had the father not gifted the daughter the account, then he would have had to pay taxes on it and he may be in a higher bracket (without considering the kiddie tax).

If it's just been earning interest all of these years, then the dad has already paid the taxes on that money and he's gifting her the full $275K and there will be no tax due.

So, under any scenario, there will not be "one hell of a tax bill" that results from his gifting his daughter this money.