If the person is giving away something, why are they imposed a tax for giving a gift? Where is the logic in that? Just curious for my own knowledge purposes.
2007-01-04 02:06:21 · 4 answers · asked by unhappy 1 in Business & Finance ➔ Taxes ➔ United States
The gift and estate tax has always been a unified tax. This means that if you gift too much in a year or if you die with more than $2,000,000 in assets your estate will pay a tax.
You can give anyone you want $12,000 a year and there is no gift tax payable by you. In addition you can tuition or medical expenses for another person and give that person $12,000 in cash and you will not owe a gift tax no matter what this total is.
The estate and gift tax are easily avoided with proper planning and knowledge of the law.
2007-01-04 04:05:46 · answer #1 · answered by waggy_33 6 · 0⤊ 0⤋
The giver is basically paying estate tax before he dies. The IRS found that many people were giving money away when they were alive to avoid estate taxes after they died. The IRS only allows a certain amount to money to exchange hands before it is taxed. It also has to do with the ability to pay. It is assumed that the giver has the ability to pay the tax if he has the ability to give money away. There is no burden placed on the receiver.
2007-01-04 10:13:07 · answer #2 · answered by Anonymous · 0⤊ 0⤋
Lifetime gifts are tied to estate taxes when you die. If you could give everything away without paying gift taxes then you would avoid estate taxes when you die. Very logical.
2007-01-04 10:09:49 · answer #3 · answered by spicertax 5 · 0⤊ 0⤋
that is the way the ball bounces
2007-01-04 10:47:01 · answer #4 · answered by michelegokey2002 4 · 0⤊ 0⤋