The federal gift tax is a tax on the transfer of property from one individual (the donor) to another (the donee) when the donor receives nothing—or less than full value—in return. The tax applies whether the donor intends the transfer to be a gift or not.
The gift tax applies to the transfer of a gift of any type of property. You make a gift if you give property (including money) or the use of or income from property without expecting to receive something of at least equal value in return. If you sell something at less than its full value or if you make an interest-free or reduced-interest loan, you may be making a gift.
For additional information, see Internal Revenue Service (IRS) Form 709 and its instructions.
The federal gift tax is applicable across all states, including Texas, and is governed by federal law, not state statutes. It is imposed on the transfer of property by one individual to another when the transfer is made without receiving something of equal value in return. This tax applies regardless of the donor's intent and encompasses all types of property, including money, real estate, and other tangible or intangible assets. If an individual sells something below its full value or extends a loan without interest or at a reduced interest rate, it may also be considered a gift for tax purposes. Each individual has an annual gift tax exclusion amount, which is adjusted periodically for inflation, and amounts gifted below this threshold do not require reporting or taxation. Gifts exceeding the annual exclusion limit may require the filing of IRS Form 709, and taxes may be due if the lifetime gift tax exemption is also exceeded. It's important to consult with an attorney or tax advisor for personalized advice, as the federal gift tax can be complex and may involve various exclusions, exemptions, and specific rules.
