Gift Tax

A gift tax is a type of tax that is imposed by the government when there is a transfer of ownership regarding personal property.

Whenever a gift that is taxable is created, the tax is normally imposed on the giver, referred to as the donor, unless if there is a retention of an interest which allows for the delays of completing the gift. A transfer is considered as completely gratuitous, meaning the donor will not be receiving anything of any value in exchange for the property that he or she has just gifted. A transfer will be considered gratuitous in part in cases where the donor receives a certain amount of value but the value of the property that is received by the donor is considerably lower than the value of the property that was given by the donor. In such a case, the amount of the gift is considered the difference.

The gift tax is governed by Chapter 12, Subtitle B of the Internal Revenue Code under tax rules in the United States of America. The tax is regulated and imposed by section 2501 of the code. In general, if an interest in property is transferred within the giver's lifetime, referred to an inter vivos gift, then the transfer or the gift would not be subjected to the estate tax.