(MONEY Magazine) – Q. My grandfather wants me to have a $100,000 parcel of land that he owns. We know that the IRS allows him to give me only $10,000 a year tax-free, so I have two questions for you. Can he duck the gift tax by selling me the land for $1? Or, if he gives me the land outright, will he have to fork over a gift tax on $90,000? Rebecca Daly WOODBINE, MD.

A. I wish the IRS would think of a new name for this tax. It confuses more people than Alan Greenspan's pronouncements on the stock market. So before I answer your question, I have to give some background. As you noted, the IRS ignores gifts of $10,000 or less. The gift tax kicks in above that level--but it isn't really a tax at all. Your grandfather pays nothing now; instead, his exemption from estate taxes (due at his death) is reduced by the amount that the gift exceeds $10,000.

Now for the answer. Forget the $1 ploy. Recognizing such way-below-market-price deals as the shams they are, the IRS treats them as gifts subject to the $10,000 limit. So if your granddad gives you land valued at $100,000, his federal estate-tax exemption will be cut by $90,000. But he's not likely to be heavily penalized for his generosity. Currently, the exemption is pegged at $625,000 (so estates worth less pay no federal taxes). And it's scheduled to rise each year until it reaches $1 million in 2006.

Q. My mother-in-law died last year after four years in a nursing home in Buffalo. To qualify her for Medicaid, which paid her bills, our family turned over her bank accounts to the state. But she also had some annuities. The insurance agent who sold them to my mother-in-law in the 1980s had told her that Medicaid wouldn't count annuities as assets, so we cashed them in and kept the proceeds--$24,000. The problem: I've read recently that Medicaid does consider annuities assets. We want to do the right thing, but we don't want to be liable for penalties or, worse, prosecution for fraud, but what will happen to us if we own up? Name withheld CASSADAGA, N.Y.

A. Unfortunately, you'll have to own up to find out. It was a mistake not to report the annuities when your mother-in-law applied for Medicaid. Medicaid regulations require applicants to declare all assets. If you turn over the money now, Thomas Begley Jr., an elder-law attorney in Moorestown, N.J., says it's unlikely that you would face fines or criminal prosecution. But the Medicaid regulators we spoke to in Albany said you might. Any penalties would be based on the amount that regulators decide you should have declared. Coming forward is up to you--so we are not printing your name--but, as you say, it would be the right thing to do.

Q. My employer matches my 401(k) contributions with company stock that is publicly traded and hasn't done too well, but the plan prohibits me from selling any of it. I've taken another job and will be leaving soon. Can the company stop me from selling the stock once I leave the plan? Joe Wyszynski HOUSTON

A. Probably not. A few employers insist that company contributions to a 401(k) plan, including stock, remain in the plan until the employee reaches age 65. This is highly unusual but, since you weren't willing to disclose your company's name, we couldn't check for you. To find out, ask your company's benefits department.

Q. I'm a chiropractor. Most of my patients have been injured in accidents, so they're involved in workers' compensation cases or lawsuits that drag on for years. Meanwhile, they don't pay me. At the moment, my patients owe me $300,000. I've been living on my credit cards, and I'm $40,000 in debt. I can't stay afloat much longer. What should I do? Tom Noe ELGIN, ILL.

A. Good grief! How long have you had this pain in the neck? Okay, no more jokes. You sound utterly desperate. The quickest way to get hold of some cash is to sell your receivables at a steep discount. This process, known as factoring, means that a buyer, or factor, purchases the legal right to collect the money owed you. Since the factor faces the same collection obstacles that you do, however, he might be willing to pay you only 25% or so of the amount you're owed. If you want to go this route, Laurie Javier, president of Advance Capital, a San Francisco company that brokers deals between medical professionals and factors, will help you negotiate. Her fee is $200, and you can reach her at 415-388-2228.

Chiropractor Charles Gibson, a practice-management consultant in Laguna Hills, Calif., suggests just getting tough with your debtors. You could hire a collection agency, which might charge you roughly 50% of what it brings in. You can find one through your local chamber of commerce. But, says Gibson, it would be best to do the job yourself. "Don't send letters," he urges. "Call and keep calling." If you're willing to be tenacious--and accept partial payments when necessary--Gibson reckons you could end up recovering as much as $200,000.

Q. Some airlines and hotel chains have affinity credit cards that allow you to accumulate extra points toward free flights or stays. I like taking cruises. Is there an affinity card that will help me earn free trips? Ken Kasel LAKE BLUFF, ILL.

A. You're in luck--there is. Carnival Cruise Lines issues a Visa card, called the Carnival Vacation Card, through MBNA America. Three percent of the amount you charge accrues as points toward upgrades to better cabins or even free cruises. For example, running up a $26,666 tab will net you 800 points, enough for a free seven-day cruise from Miami to the Bahamas. Unfortunately, it will take you a long time to set sail because you can earn a maximum of only 400 points a year. The card also has an annual fee of $25 and an introductory interest rate of 5.9% that rises to 17.9% after five months. If you're still interested, you can apply for the card by phone (800-963-7447), and you'll get 100 free points the first time you use it.

Q. I'm 36 and a self-employed realtor. I earn 30% to 38% a year on my money buying houses, making some cosmetic repairs and then selling them. That rate of return is pretty hard to beat with other investments, so I'd like to start a tax-deferred retirement plan to buy and sell houses that I'd pick. Can I do that? Joe Bruce FORT WAYNE

A. You can. The question is, should you? I don't think so, but let me explain. It's perfectly legitimate to invest tax-deferred savings in private homes, although it can be mighty difficult to do. The biggest obstacle is cost. You must have enough money in your plan to pay cash for the house because you cannot put a mortgaged property in a tax-deferred account. If you buy fixer-uppers, you'll also need enough in the account to pay for all the repairs. Otherwise, the IRS will consider anything you spend improving your property to be a donation to your retirement plan--and penalize you for the excess contribution. Luckily, you're self-employed, so you're not limited to stashing a mere $2,000 a year in an IRA. You can open a Keogh plan or a simplified employee pension, which will allow you to put aside as much as $30,000 a year.

But here's my objection. It's not such a hot idea to put all your retirement savings into a single type of investment, particularly when it is also the source of your livelihood. A real estate slump could slash both your income and your retirement fund. I think you're better off diversifying your pension investments.

Reporter associate: Susan Berger