Can people sell their real estate under fair market value to their children?

I have a friend who has a big property which market value is $3,000,000. He decided to sell it to his son for $300,000, so he can avoid gift tax and estate tax. Can he do so?

Public Comments

You can sell it to anyone you want for whatever amount you want. To make it legal tho it must be a dollar or more.
Please read the statement issued by the IRS...very informative information.
I'm pretty sure the gift tax is on FMV - amount of funds that really changed hands. And as an added bonus, sonny will get to pay capital gains tax on however much it appreciates from when friend bought it until when sonny sells it.
Yes, it's his property and he can do what is legal and lawful.
From the IRS website: What is considered a gift? Any transfer to an individual, either directly or indirectly, where full consideration (measured in money or money's worth) is not received in return. ************** The difference between the 3,000,000 it's worth and the 300,000 he sells it for would be considered a gift and he would have to pay tax on it. Tell him to get a tax adviser and look into putting the property into a trust or something.
Yes he can, but there are technicalities. For example, typically state governments will charge transfer taxes on the assessed value if the purchase price is less; I would consult a savvy tax attorney about gift and estate taxes, as the IRS has some nasty tricks up their sleeves for just such occasions.