The federal gift tax theoretically applies to any gratuitous transfer of property by an individual.
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Gifts in excess of the annual exclusion are subject to the federal gift tax.
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What is in question, however, is whether those donations should be subject to the federal gift tax (currently sitting at 35%).
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Deposits count as gifts to the child for federal gift tax purposes.
The IRS has taken the position for the last thirty years that those transfers are, in fact, subject to the federal gift tax.
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Transfers of property in exchange for nothing (or less than full value) are subject to federal gift tax if they exceed the annual exclusion.
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For some wealthy families, the chance, right now, to transfer substantial assets at little to no Federal gift tax cost might expire at year-end.
That bit can be confusing because, for federal gift tax purposes, expenses paid on behalf of another person but made directly to a medical institution are excluded from calculations when figuring taxable gifts.
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Different rules apply for federal estate and gift tax purposes, as well as state law.
For advice on rewriting your will in line with the new federal estate and gift tax laws, click here.
As it stands today, on January 1, 2013, the federal estate and gift tax law will revert to those which were in effect in 2001.
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Federal estate and gift tax numbers are moving, too.
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With a conservation easement, you give some or all of the development rights on your land to a government agency or not-for-profit (there are more than 1, 700 local land trusts), and you get a federal income tax deduction for the gift (the difference in the value of the land before and after the easement is in place).
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Furthermore, it is likely that the federal government will initiate unfavorable changes to the estate and gift tax laws in order to compensate for government deficits.
The Federal income tax and the transfer tax (i.e. estate, gift and GST tax) systems are separate and distinct.
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The increase in other federal government tax revenue would more than offset the decline in the estate tax portion of the estate and gift tax.
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