Gift Tax
Gift Tax means:
a graduated excise tax levied on the donor of a gift by the federal government and most state governments when assets are passed from one person to another. To prevent people from avoiding the estate tax by giving their property away, the law includes a gift tax. A taxpayer may give up to $13,000 yearly to as many people he or she wants without worrying about this tax. Larger gifts are taxable, but a tax credit offsets the tax on the first $5 million of lifetime taxable gifts. Generally, each person may give up to $10,000 per year to each donee without imposition of a federal gift tax. On higher gifts in the same year, however, there may be a gift tax, or the gift may affect the donor's estate tax by reducing the $600,000 lifetime gift and estate tax exclusion. Any part of the credit used to protect taxable gifts will not be available to reduce estate taxes. Former IRC (check if this IRC provision is current here) §2501.
See also other Tax Terms and Definitions in U.S.A.
unified estate and gift tax.
When the gift tax is owed, it is owed by the giver, not the recipient.
Description and Definition of Gift Tax
A tax levied on an individual who gives more than $10,000 per year to another individual. Gifts in excess of the $10,000 per donee annual exclusion are subject to gift tax, but the tax may be offset by a unified gift and estate tax credit. Tax credits offset the tax on the first $650,000 of lifetime taxable gifts. That limit will gradually rise to $1 million in 2006. Any part of the credit used to protect taxable gifts will not be available to reduce estate taxes. When the gift tax is owed, it is owed by the giver, not the recipient.
Federal Estate and Gift Tax Applicable Exclusion Amount Issue
You may find information about Federal Estate and Gift Tax Applicable Exclusion Amount in this Tax Platform of the American Encyclopedia of Law.
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