Tax Analysts provides news, analysis, and commentary on tax-related topics, including the latest developments affecting tax treatment of gifts.

When a taxpayer transfers property by means of gift, that taxpayer may be subject to federal gift taxes. The gift tax is addressed in the Internal Revenue Code at sections 2501 through 2524 and in the associated regulations. The donor is responsible for taxable gifts and payment of this tax.

Each donor may exclude an inflation-adjusted amount of gifts made by a donor during a particular tax year from the total amount of that donor’s taxable gifts during that year. This amount is the first $10,000 of gifts to each recipient (section 2503(b)(2)), adjusted for inflation (Rev. Proc. 2014-61). Furthermore, with respect to gifts that have exceeded the annual amount during the taxpayer’s lifetime, each taxpayer is allowed an additional amount that can be transferred without taxation. This credit is addressed in section 2505.

Gifts between spouses are generally not taxable gifts, unless a donor’s spouse is not a United States citizen, in which case an annual exclusion, described in section 2523, applies. Nonresident aliens many be responsible for gift tax for gifts of property in the United States (section 2501). Amounts paid for education or medical treatment may be excluded from taxation as gifts under section 2503. Special rules also apply to charitable donations, gifts to minors, and gifts to trusts.

Tax Analysts consistently and promptly publishes all relevant developments regarding taxation of gifts and IRS gifting rules.