Thank you all for your replies, I appreciate it very much.

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"Just Me" <nospam[at]me.com> wrote:

- quote -

Both.

The $11,000 threshold is for filing a gift tax return and
for using up your lifetime unified tax credit. If you give
more than $11,000 in a year to another person, there is gift
tax on the difference. (There are exceptions: you can give
an unlimited amount to your spouse, so long as he or she is
a citizen or resident; you and your spouse can jointly give
$22,000 in a year to anyone.)

You don't pay gift tax currently until you've made a million
in taxable gifts; all the taxable gifts you make come out of
your lifetime credit. The $1,000,000 threshold is the point
at which your unified tax credit will be used up and you
start paying gift tax currently.

--
Chris Green

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"Just Me" <nospam[at]me.com> wrote:

- quote -

It is pretty much the fact that both are correct. See a
competent tax pro in your area about this matter for more
details.

Wayne Brasch, CPA, M. S. Taxation

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Just Me <nospam[at]me.com> wrote:

- quote -

Both.

If you give $11,000 to a given person in a year, you have no
tax liability. You do not have to file a gift tax return.
The gift is not subtracted from your lifetime maximum
($1,000,000, more or less). Further, you can give $11,000 to
as many people as you want.

Say you want to give money to a family of 4: dad, mom, son,
daughter. A married couple could give that family a total
of $88,000 as follows:
husband gives $11,000 to "dad"
husband gives $11,000 to "mom"
husband gives $11,000 to "son"
husband gives $11,000 to "daughter"
wife gives $11,000 to "dad"
wife gives $11,000 to "mom"
wife gives $11,000 to "son"
wife gives $11,000 to "daughter"

This would not trigger any tax liability nor require a gift
tax return.

Now, assume Uncle Scrooge (single) gives nephew Donald
$21,000 in one year. (We may reasonably assume that
figure-skating is the new in-sport in Hell.)

Uncle Scrooge must now file a gift tax return. The first
$11,000 is exempt, but the other $10,000 is _subtracted_
from Uncle Scrooge's lifetime $1,000,000 exemption. Assume
Uncle Scrooge does this every year for 50 years, then dies
and leaves an estate of $50,000,000.

The gifts during Scrooge's lifetime have used up $500,000 of
his $1,000,000 lifetime exemption ($10,00 times 50). That
leaves $500,000 remaining.

Scrooge's estate will have to pay inheritance taxes on
$49,500,000, the remainder after applying (what's left of)
his lifetime exclusion. What is left after paying those
taxes (roughly 25,000,000) will be distributed to Donald,
Huey, Looey, and Dewey in accordance with Uncle Scrooge's
will.

This is for discussion purposes only, and is not legal
advice. I'm not a lawyer or a tax professional. If you
want legal advice, hire a lawyer.

--
I pledge allegiance to the Constitution of the United States
of America, and to the republic which it established, one
nation from many peoples, promising liberty and justice for
all.

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"Just Me" <nospam[at]me.com> writes:

- quote -

Gifts to any one individual to any other individual, which
exceed $11,000 (for the current year), require that a gift
tax return be filed. Whether or not they will ever be taxed
may well depend on when one dies. Although the gift "tax"
may not currently apply, the return must be filed in any
case.

"Jack" - John H. Fisher - TaxService[at]aol.com
Philadelphia, Pa - Atlantic City, NJ - West Wildwood, NJ
My Newsgroups & Boards at: http://members.aol.com/TaxService/index.html

Where Ignorance is bliss, 'tis folly to be wise!=

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"Just Me" <nospam[at]me.com> writes:

- quote -

Both. See the instructions for Form 709.

Phil Marti
Topeka, KS

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"Just Me" <nospam[at]me.com> writes:

- quote -

Both :-)

Gifts in excess of $11,000 per year to a single person
do incur gift tax. However, you are required to use your
unified gift/estate tax credit to offset said tax. So until
lifetime taxable gifts hit $1,000,000 (or whatever the figure
is this year), no tax will actually have to be paid. However,
even if no tax is paid, the occurance of taxable gifts will
reduce what your estate can be and still be tax-free.

--
Rich Carreiro rlcarr[at]animato.arlington.ma.us

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Just Me" <nospam[at]me.com> wrote:

- quote -

If you keep to the $11K limit per individual, you do not
have to file a gift tax return. If you exceed that amount
then you file a return. Your lifetime exemption is based on
gifting $1,000K. Until you use up the exemption, no tax
would be paid.

Alan
http://taxtopics.net

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I've heard that one can "gift" up to 11,000 annually without
incurring gift tax. I've also heard that gift tax doesn't
apply until a person has given over 1,000,000. which is
correct?

Tia

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