Gifting

GIFTING

Gifts reduce income and death taxes as well as lowering the costs of probate, in addition to playing a part in passing property from one generation to the next. Where a direct gift is inappropriate due to the recipient's age or business experience, a trust may be used. Gift Tax is calculated on the value of the gift made, and gift tax is paid by the donor. There is no tax imposed on the tax paid by the donor. The same is not true for gifts passing at death, since the estate tax is imposed on the value of the entire estate of the decedent -- which includes the value of property used to pay the estate tax.

The Gift Tax was not repealed by the Economic Growth and Tax Relief Reconciliation Act of 2001.