Since my business partner cannot invest in our business due to a divorce, should a family member gifting us money make the check out to me or the business?

by James S. Anderson, CPA | May 31, 2018

My business partner is going through a divorce and is currently unable to invest significant money into the business. His sister is gifting me money. Should she make the check out to me or to the business, and should it be put into the business account? Also, is it considered income?

Gifts are made between individuals. A gift would be from your business partner’s sister to you personally, and deposited into your personal bank account. This gift is not income to you and is not deductible for her. Depending on the amount, she may be required to file a gift tax return with the IRS.
There is insufficient information in the question to determine how the business entity would treat the transfer of funds from your personal account to the business account. I recommend sitting down with a CPA and providing the necessary details to determine the treatment of those funds.

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Answered by: James S. Anderson, CPA, is with Campbell, Rappold & Yurasits LLP in Allentown, Pa.

The responses are based on the limited information provided by the questioner and apply the laws and regulations at the time of posting. Other options could arise as rules and regulations may change over time, including but not limited to the passage of the Tax Cuts and Jobs Act of 2017. They are intended to provide general information, not specific accounting or tax advice; they are not intended or written to be used and cannot be used for the purpose of avoiding or evading taxes or penalties under the IRS code or regulations. Views expressed do not imply an opinion of the PICPA, its officers, directors, employees, or members.
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