The Legality of Cash Gifting

Some of the most common apprehensions with cash gifting are the concerns around whether it is legal, or a just a scam or even if it some type of pyramid scheme that borders on legal. The intention of this post is to dispel these flawed beliefs.

A lot of people research or become interested in cash gifting because they are looking for a way to bring in a cash flow and be able to either stay at home or otherwise work from remote locations. They have also usually already explored home based businesses and MLMs as well and have opted to go a different route for their own personal reasons. So why do they still hesitate to get started? Fear based on a lack of accurate information. Many decisions are made in this world based on “facts” that are actually just opinions. Facts are facts—so that is what I will be sharing in this article.

So let’s begin by defining cash gifting, and pyramid schemes. Cash gifting is the act of privately or publicly giving another person a declared amount of cash. This cash is given freely; it is not a loan, is not for goods, nor is it for any services rendered. Most of the population of the world is already engaged in cash gifting in some form or another. For example, sending a birthday, wedding or Christmas card with money in it is cash gifting. Charitable contributions are also forms of cash gifting, however, because they are given to non-profit organizations and not individuals—those contributions can be tax deductible. The premise behind it is the same, especially as it relates to religious donations. The individuals give freely to the church as a way of showing faith that this will come back to them 10 fold.

A pyramid scheme is defined as an illegal investment scheme in which investors are promised returns on their investments. There are usually several layers or levels that receive a portion of each investment and usually only those at the top see return on their investment. The primary differentiation between a pyramid scheme and cash gifting is the levels and the promised return on investment. There is no hierarchy in cash gifting and no one at the top is bringing in all of the revenue. It is based on the principle of reciprocity: “…pay in kind what another has provided to [you]”

Cash gifts, up to $12,000 a person is also not taxable, (according to The Internal Revenue Gifting Tax Code Title 26, Sections 2501-2504 and 2511) provided they follow the guidelines outlined in the Tax Code. These guidelines state that the cash gift cannot be made with any expectation of return, no goods or services will be rendered, and no future expectation of return will be made. This is the definition of cash gifting. I would encourage anyone interested or skeptical of cash gifting to read the tax code.

Scams attempt to defraud someone into believing something that is not true. So, provided that you believe in the Law of Attraction: ‘that giving is the best way to bring about receiving’ as a Universal truth…it cannot be considered a scam.

Brett
http://blog.brettdunham.com/