Recently my mother-in-law who is 87 years old sold her primary residence and gave 1/3 of the proceeds to my wife and myself. Is this considered an inheritance and what are the tax consequences for both my mother-in law and myself.
Divorce / Separation Lawyer
It's not an inheritance, because she's alive.
Your mother MAY need to file a federal gift tax return. She can give $14,000 per person ($28,000 if she gave two SEPARATE gifts, one to you and one to your wife) or after January 1, 2013 with no return needed. (The figure was $13,000 if this happened in 2012).
Unless the gifts were very large even if a return is needed there may not be a tax. Consult your CPA if the per person gift exceeded the amount listed.
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Family Law Attorney
It's not inheritance if the person is still alive. Consult a CPA to determine the most advantageous tax treatment at this point. Doing so BEFORE she gave you the proceeds would have been a good idea.
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Family Law Attorney
I agree with attorney Ashman. You receive an inheritance after someone dies. What you received is a gift, subject to gift tax by the donor (your mother-in-law) for amounts in excess of the yearly exemption.
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This is a gift not an inheritance. Any federal gift tax is an issue for the donor (your mother). Georgia does not have a gift tax. Gift tax would only apply if the amount exceeded lifetime total of 5.25M. If your mother gifted more than 14K to anyone individual, she would have to file a gift tax return (Form 709) when filing her income tax return. Failure to file penalties are based on the tax due, so if her total gifts over her life are less than $5.25M then no penalties or tax even if the return is filed late.
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