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My parent gifted me a sum of money and then realized they needed it back for a future financial obligation. Based on my (possibly incorrect) understanding of gift/estate taxes, each transfer back and forth is a gift and independent taxable event. I also understand that we both have an enormous lifetime exemption where this ultimately probably does not matter. Nonetheless here are my questions:

  1. Does it matter if I return the money in the same year, or a different one? i.e. if I transfer the money back in the same tax year, can we pretend we didn't make the transfer? Does it matter if the transfers are in different tax years?

  2. If I transfer this money back to him, and then I later inherit it, would he effectively be double taxed on this money, as it counts twice towards the lifetime/gift/estate tax?

  3. Do I also count this gift against my future estate?

  4. If he then transferred the money back to me again, I assume this continues to count against the tax, right? i.e. for tax purposes we should try to minimize these transactions, in the event it ultimately mattered.

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  • Is the amount more or less than $15,000? Is the parent who made the gift married? Are you married?
    – The Photon
    Apr 29, 2021 at 18:33
  • >15K. The parent is married. I am not married (though may be soon, if relevant).
    – user788497
    Apr 29, 2021 at 18:49

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The process for turning down a gift or an inheritance (usually done for tax reasons) is called a disclaimer and strict rules apply. ... You must disclaim within nine months of receiving the gift. And more significantly, in order for a disclaimer to be valid, the gift recipient generally may not have accepted an interest in the asset or any of its benefits.

https://www.forbes.com/2011/01/12/estate-tax-congress-undoing-2010-taxable-gifts-personal-finance-deborah-jacobs.html

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