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Question about being POA for Parent and IRS
Old 10-11-2007, 03:07 AM   #1
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Question about being POA for Parent and IRS

I am a POA for my parent. Currently I am selling some personal property that will probably have a capital gain (some collectibles) for her. The proceeds will be used for health care. If she passes, it will go to the estate. Of course, there is a contract in her name for these sales and I am signing for her as the POA.

She will owe some taxes.

My question is. Am I liable in any way for any of her obligations... for example will the tax obligations be hers or am I somehow responsible.
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Old 10-11-2007, 06:22 AM   #2
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As long as the assets are hers and haven't transferred to you via gift or purchase, the tax obligation is hers. If you took a fee for handling the transaction, then the fee is your income, but rest of profit would be hers. If she passes before the sell of property, then I assume the property would go to estate and the estate would settle any tax obligations from sell.

Note: This is my understanding and is not legal advise
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However ......
Old 10-11-2007, 07:38 AM   #3
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However ......

if you fail to pay the taxes from her assets spending them instead on trivial things such as her living expenses, the IRS will come after you for her taxes, at least up to the amount you could have paid from her assets. Their position will be that you had the ability to get her taxes paid from her assets and failed to do so, therefore you are responsible. If her tax bill is for some reason more than her assets, then make sure that is documented. Use all her assets to pay the taxes, but you would not be obligated to make up any shortfall from your own assets..

Disclaimer: I am not a lawyer, this is based on an article I read once. Your mileage may vary.
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Old 10-11-2007, 03:05 PM   #4
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Quote:
Originally Posted by chinaco View Post
I am a POA for my parent. Currently I am selling some personal property that will probably have a capital gain (some collectibles) for her. The proceeds will be used for health care. If she passes, it will go to the estate. Of course, there is a contract in her name for these sales and I am signing for her as the POA.

She will owe some taxes.

My question is. Am I liable in any way for any of her obligations... for example will the tax obligations be hers or am I somehow responsible.

Where's Martha? With the POA you are acting on behalf on the person you are POA for. POA language pretty much states you are signing to act in the "best interest" of the person you're representing.

I suppose, as a legal representative of the assets, you could be sued for NOT acting in the best interest of the person you are POA for, but their debts are their debts, not yours. However, if they are trusting you to pay income tax, and you don't file, the IRS could include you as a party to the tax evasion...........
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