Gift Tax
A gift tax is a federal tax that is incurred by any person who gives a gift to another person. Each person has an annual gift tax deduction limit. Once she exceeds this limit in gift donations, she must pay a tax on it. In this case, the recipient of the gift may also pay the tax for the donor.
Legally, a donation is considered a gift as long as the recipient does not pay its full market value in order to receive the donation. However, certain gifts do not incur taxes such as a gift to a spouse, political donations, or a parent paying for his child’s medical or tuition expenses.
Author: Kris Tabetando
Kris Tabetando provides mergers & acquisitions (M&A) advisory and brokerage services to Internet companies. He also partners with investors to acquire & manage Internet businesses.
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