Gift Tax Study Guide

Gift Tax Study Guide - Gift Tax Study Guide The federal...

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Gift Tax Study Guide The federal gift tax is a tax imposed by Chapter 12 of Subtitle B of the Code on transfers of property by gift by individuals (whether they are U.S. residents or nonresidents). The gift tax is an excise tax on the transfer, not a tax on the subject of the gift. The federal gift tax applies to any gift of real or personal property, whether the transfer is in trust or otherwise, whether the gift is direct or indirect, and whether the property is tangible or intangible. In the case of a U.S. citizen or resident, the gift tax applies to any gift of property, no matter where the property is located. Nonresident aliens are subject to the gift tax for gifts of real property and tangible personal property situated in the United States. However, they are not subject to gift tax on transfers of intangible property unless they are an expatriate. The gift tax applies not only to gratuitous transfers but also to sales, exchanges, and other dispositions not in the ordinary course of business if the amount received is less than the value of what is sold or exchanged. The exercise or release of a general power of appointment is deemed a transfer of property by the individual possessing the power. If an individual who has a qualifying income interest for life in property for which an estate and/or gift tax marital deduction was allowed (because the property was qualified terminable interest property) disposes any portion of that qualifying income interest, the individual will be treated as having transferred not only the qualifying income interest but also all interests in the property other than the qualifying income interest. Transfers of services and transfers satisfying the donor's legal obligations are not subject to the gift tax A payment of tuition on behalf of an individual directly to a qualifying educational organization for the education or training of that individual is not subject to the gift tax. The exclusion for tuition payments applies without regard to the relationship between the donor and the donee. A payment directly to a health care provider for medical care provided an individual is not subject to the gift tax. The exclusion is not available for amounts paid for medical care to the extent that they are reimbursed by insurance. A transfer of money or other property to a political organization for the use of that organization is not subject to the federal gift tax. The amount of a gift is the value of the property transferred on the date of the gift. If property was transferred for less than full and adequate consideration in money or money's worth, the amount by which the value of the property exceeds the consideration is deemed a gift. As a general rule, the value of property is the price at which it would change hands between a willing buyer and a willing seller, neither being under any compulsion to buy or to sell and both having reasonable knowledge of the relevant facts. There are special rules for valuing life insurance, annuities, publicly traded stocks and bonds, mutual fund
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Gift Tax Study Guide - Gift Tax Study Guide The federal...

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