The Cash Gifting Truth

Cash Gifting means what?

Under the IRS Tax Code Title 26, Sections 2501-2504 and 2511 cash gifting is approved and is legitimately used to cut the size of your estate. You are allowed to gift as many people as you like up to $12,000 dollars during a calendar year, and those people will not be required to pay taxes or report the income. For this to be true however there can be no strings attached to the gift. You can not receive anything for this gift and that means nothing. Well you can thank them but they can’t force you too. Attorneys and Accountants will recommend this process when they are doing estate planning a lot of the time to cut tax burdens.

Many people, and organizations have tried to find ways around this and have in the end created Ponzi schemes which end up causing trouble. Many cash gifting scams will promise high returns on your “investment” in short periods. This is to attract more people into the organization, like any Ponzi the more people who join the more money that is needed to pay out, because as you join the money you put in is used to pay out the ones above you. All Ponzi schemes will fail when the amount of money it owes floats over the amount of money coming in. If you are late into the scheme you will lose your money.

Most cash gifting organizations work hard to stay away from the Ponzi label and will not call themselves investments because they do not want to fall under the guidance of the SEC. They also try to avoid calling themselves business opportunities because they do not want to imply that there is a contract of any sort. These are dangerous to you and you will more than likely lose every penny you put in. Scam Times official recommendation is “Stay Away”.

How does cash gifting work?

Normally you will find “the system” will need you to pay a membership fee to cover all the costs of the organization, they will tell you that anyone joining the program will receive money. They do not always tell you the only people you will receive money from is the ones you get to join. That is why you will find many pay-per-click advertising trying to get people to join cash gifting programs.

In most cases you have to agree to a specific amount of money you will be gifting to join the program, this money is to be given to someone else of course. You will gain a private member number when joining that will be used to track what you give and who you receive gifts from. In most cases you will be “taught” how to recruit people under you to give you gifts etc. If you do not recruit the program will fail however because not enough money will be brought in to support the amount of money going out.

The cash gifting schemes all line up like a pyramid scheme, with you giving your money to the person above you and you signing up more people below you to give you money, there is no way around this with cash gifting scams, Just for an example we will look at some basic numbers.

Let say you are joining a club with a 10,000 dollar payout, and you must sign up by gifting 1,000 dollars which means that 10 people must be recruited to pay off the first person. However if this moves to 100 people the club now has to generate $1,000,000 dollars to pay off those 100 people. Which means we have to recruit 1,000 people to join in and for those to get paid we have to generate $10,000,000 to pay of those 1,000 people this means we have now failed because we have to recruit 10,000 people. This grows and grows quickly and people are losing money.

Tagged as: cash gifting, the system