gift tax

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Related to gift tax: inheritance tax, Form 709

Gift tax

A tax assessed on the giver of a property or asset as a gift. A $10,000 federal gift tax exemption exists per recipient. See: Gift splitting.

Gift Tax

A tax that the federal government levies on givers of gifts in excess of a certain value. If the value of a gift is over a certain amount, which varies from year to year but is always over $10,000, the government assesses the gift tax. The tax applies even if the recipient pays for the gift, so long as he/she does not pay for the full value. Generally speaking, payments for medical, educational, and political purposes are exempt from the gift tax, as are gifts to one's spouse.

gift tax

A federal tax that is imposed on the giver and determined on the basis of a unified gift and estate tax schedule. Annual gifts above a specified amount per recipient are deducted from a lifetime exemption. This exemption applies jointly to accumulated gifts and to the taxable estate left at death. In most cases, only relatively large gifts incur a tax. See also unified credit.

Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.

Gift tax.

A gift tax is a tax on the combined total value of the taxable gifts you make that exceed your lifetime federal tax-exempt limit of $1 million. The tax is figured as a percentage of the value of your gifts over that amount.

For example, if during your lifetime you make taxable gifts of money and property valued at $1.2 million, you will owe federal gift tax on $200,000. You might also owe state gift tax, depending on where you live.

However, you can make annual tax-free gifts to as many individuals and nonprofit institutions as you like. As long as the value of the gifts to each individual is less than the annual limit set by Congress, that amount doesn't count against your lifetime tax-free limits.

Gifts to nonprofits are not taxed and don't count against your lifetime limit either.

If you're married, you can give your spouse gifts of any value at anytime, totally tax free, provided he or she is a US citizen. There are limits on spousal gifts when the spouse is not a citizen.

You are not required to report the tax-free gifts on your tax return, but you must report taxable gifts whose value exceeds the annual tax-free limit on IRS Form 709 for the year you make them. The tax becomes due when the cumulative total exceeds $1 million.

However, the law setting the $1 million limit is set to expire at the end of 2010. Unless Congress acts before that date, the lifetime tax-exempt limit will fall back to $675,000.

gift tax

A federal tax that must be paid by a donor.The tax is based on the value of lifetime gifts made to others except in the following situations:

• For the base year of 2004, one can make gifts of up to $11,000 of cash or property per year to each recipient without incurring gift taxes; spouses may give up to $22,000 per year to each recipient. After 2004, there is a cost-of-living adjustment. This is an important aspect of estate planning. See family limited partnership for details.

• Tuition or medical expenses paid directly to the educational or medical institution are not counted as gifts, regardless of the relationship with the student or patient.

• Gifts to spouses are not taxable; there are no dollar limits.

• Gifts to political organizations or charities are not taxable.

For more information, see Publication 950,“Introduction to Estate and Gift Taxes,” available at the IRS Web site,www.irs.gov.

Gift Tax

A graduated federal tax paid by donors on the value of gifts exceeding a specified amount, which is indexed for inflation. For the current amount, see IRS Publication 950 or Form 709.

References in periodicals archive ?

Still, the $15,000 annual gift tax exclusion can have practical effects in many situations.

More give in the gift tax

The income taxes on the trust itself would further reduce his estate without incurring any gift tax liability (because he received consideration for his membership interest) or using up his exemptions.

Gift tax returns & IRS examination: challenges and pitfalls for practitioners

The finding was that effective tax rates were increasing by a growth rate ranging from 1.1 to 1.32 % similar to the gift tax. For individuals who cannot take advantage of deductions, the effective tax rate was 15 % due to a flat tax rate.

Gift tax and its incorporation into the income tax

Therefore, because of the uncertainly about what Congress may or may not do in the future, a taxpayer who is considering making a $5 million tax-free gift in 2011 or 2012 might be concerned that either an additional gift tax will be assessed at the time a subsequent gift is made or an additional estate tax will be imposed upon death.

Clawback of the gift tax

Since the non-voting interests are not readily marketable, they might be discounted for gift tax valuation purposes.

How to smartly give away assets during your lifetime

The estate argued the gift tax was the responsibility of the trustees and was paid by them, not Morgens, and therefore section 2035(b) should not apply The court disagreed, stating the QTIP provisions treated the QTIP as passing to Morgens from her late husband; thus, she was the deemed donor of the gift despite never having control of the ultimate disposition of the QTIP As the deemed owner, she was liable for the tax, and her right to recover that tax from the gift's recipients only shifted its financial burden, not the initial responsibility for reporting and paying the tax, according to the court.

Gift tax on QTIP transfer included in gross estate

If neither you nor your spouse has used your lifetime exclusions for estate taxes, this gift would result in NO gift taxes (the exempt amount each spouse can gift is $1,000,000).

Family Limited Partnerships, an estate planning technique

Prior to SOI's gift tax study, few data, besides broad totals from IRS revenue processing and collections, have been available for the gift tax filing population.

Inter vivos wealth transfers, 1997 gifts

If Donna disclaims the interest and the property goes to Manuel, Donna is not subject to the gift tax. However, if Donna initially accepts the property and later transfers it to Manuel, Donna is then subject to gift tax.