Question for CPAs about taxes...?

Question:

My sister recently cashed in some stocks and deposited $50K into her account. For some bizarre reason (she won't tell me exactly why, I think she's up to something) she wants to transfer the $50K to my account via a check written out to me, then have me wire transfer the money to her account in Canada where she lives.

I told her I don't want to do that because it would count as income for me and I would have to pay taxes on it. She says I don't have to pay taxes on it if I transfer it to her within 30 days. Is that true?

Answer:
You don't pay taxes on money that is deposited into your bank account. Your sister owned the stock in her social security number. They will issue a 1099-B for the gain and SHE WIll need to report it on her taxes.

Also - a deposit of $50k in your bank account will require a form from the bank stating where you got the money - this has nothing to do with taxes it was brought about with the Patriot Act to see where terrorists are moving money but you will do the form anyway.

She also has created a "gift" to you that she will need to report on a gift tax return (not taxable to you). She really is creating more of a mess than she is solving.

Any reason why she can't transfer her money to Canada?

In answer to your additional details, the IRS will know that this is not legal income because there would be no 1099 or W-2 that they received indicating that this is income to you. On the other hand, transfers of over $10,000 are reported to the IRS. This law predated the Patriot Act. It was a way of detecting money laundering and other illegal activities.

I once worked for a company where someone (an owner)transferred almost a million dollars from an offshore account to the business account. The company immediately transferred this money out. The company was contacted by the IRS, Criminal Investigation Department.

Question for CPAs about taxes...?

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