Definition§
A gift is a voluntary transfer of property or assets from one person (the donor) to another (the recipient) without any consideration—that is, without the recipient paying or delivering something of equal value in return. Gifts can include cash, physical property, financial securities, or other valuable assets.
Examples§
- Monetary Gifts: A parent gives their child $10,000 to help with a down payment on a house.
- Real Estate Gifts: Grandparents transfer ownership of a vacation home to their grandchildren.
- Stock Gifts: An employer gifts shares of company stock to an employee as part of a holiday bonus.
Frequently Asked Questions (FAQs)§
1. Are all gifts subject to gift tax?§
Not all gifts are subject to gift tax. The IRS allows an annual exclusion amount (e.g., $15,000 per recipient per year) that can be gifted without incurring gift tax.
2. Can gifts affect my income tax?§
Generally, the recipient of a gift does not have to pay income tax on the value of the gift. The donor may have to file a gift tax return if the gift exceeds the annual exclusion amount.
3. What is a taxable gift?§
A taxable gift is any transfer of property by gift that exceeds the annual exclusion amount allowed by the IRS. The value of the gift over this amount might be subject to gift tax.
4. What is the gift tax exclusion for 2023?§
The gift tax exclusion for 2023 is $17,000 per recipient per year. Amounts above this may require filing a gift tax return.
5. How is a gift tax return filed?§
A gift tax return is filed using IRS Form 709. It must be filed by the tax due date of the year following the year in which the gift was made.
Related Terms§
- Taxable Gift: A gift that exceeds the IRS annual exclusion amount and may potentially incur gift tax liabilities.
- Gift Tax: A federal tax applied to the transfer of property by gift during the giver’s lifetime.
- Consideration: The benefit that each party gets or expects to get from the contractual deal.
Online References§
Suggested Books for Further Studies§
- The Taxpayer’s Guide to Gifting by William J. Clark
- Understanding the Gift Tax: A Practical Guide by Michael M. Robinson
- Gifts: Family and Philanthropy in Late Antiquity by Brent D. Shaw
Fundamentals of Gift: Business Law Basics Quiz§
Thank you for exploring the concept of gifts and understanding their implications within business law and taxation. Continue to deepen your knowledge with our comprehensive resources and interactive quizzes!
