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Thread: Investment gift from family

  1. #1

    Default Investment gift from family

    I have an e-commerce site that is outdated and suffered this past year. A family member gave me a cash gift of 5k to inject some life back into it. Going to use the money to redesign and do some advertising..

    My question is, being that it's not my earned money, can I still write off what I use it for expense-wise? Say I use 1k of it for redesigning, can I write off that 1k? Or should I just not write off 5k worth of my yearly expenses?

  2. #2
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    Ok, first off, (assuming USA) no gift tax on the gift because it's under the exclusion amount. Might still have to declare it on your taxes, though, but it's a $0 tax at the end of the process.

    Now you have $5K. It's your money. If you decide to invest all or a portion in your business, that's a capital transfer into the business. If you decide to invest none in the business and just have an unreimbursed business expense to you after you pay the designer with some of that money, that's also a possibility to consider (it's how we handle a lot of our expenses for one of our businesses... we pay the bills then submit an expense report to the business which pays us eventually out of cash flow).

    Either way, whatever money you use on the business is going to turn into an expense at some point. The money you do not use for/transfer into the business is not actually related to the business, so that's not going to show up on any income reports or tax documentation.

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