What Is The 2019 Gift Tax Limit?

The Law of Frying Pans

Making Your Gifts Cook

‘Tis the season for giving and receiving gifts. 

So here ‘tis your first gift of the season:  a primer on the law of gifts.

What Is Considered A Gift?

Simply stated, a gift is a voluntary transfer of property made gratuitously.  There is, of course, a bit more to it. The owner has to intend to give the property, the property has to be delivered, and the property has to be accepted.

For example, if you hand your brother your frying pan while saying “this is my gift to you,” and your brother says “thank you”, then it is a gift.   You have intent, delivery and acceptance.

 If your brother comes into your kitchen and forces you to give him your frying pan, then it is not a gift because the transfer is not voluntary. 

If you demand that your brother pay you $10 for your frying pan, then it is not a gift because you expect payment.  

If you tell your brother “I am giving you my frying pan” but you do not hand it to him, then it is not a gift because it was not delivered.  

If you hand your brother your frying pan and he says “I don’t want this piece of junk,” then it is not a gift because it was not accepted.  Plus, your brother is rude.

If you hand your brother your frying pan and say “this is my gift to you,” but you did not mean it, then it is not a gift because you did not have the required intent to make a gift.  

The burden of proving that a transfer is a gift is on the person claiming the gift.  Thus, your brother has the burden to prove that he received the frying pan from you as a gift.

Giving Gifts To Your Spouse and Children

Some classes of recipients have an easier burden to prove a gift.  A transfer from a parent to a child is presumptively a gift. If you hand your child a computer and say “I give this to you,”  then you can only overcome the presumption that it was a gift by clear and convincing evidence. You might not want to share this little bit of law with your children.

Gifts to and between spouses are a bit trickier.  A gift is separate property, so if you give your brother and his spouse a frying pan, then each owns one-half of the frying pan as separate property.    

A gift from one spouse to another is separate property.  If your brother and his wife purchase a frying pan out of their joint account, and your brother then hands the frying pan to his spouse and says “this is my gift to you” then the frying pan becomes his spouse’s separate property.   In their resulting divorce, the spouse would get to keep the frying pan. 

What is the 2019 Gift Tax Limit?

Finally, a bit of tax trivia.   In 2019, the federal gift tax exemption is $15,000.  That is the maximum amount you can give per person without having to report the gift to the IRS.   

Virginia Hammerle is the President of Hammerle Finley Law Firm.   To sign up for the firm newsletter, email legaltalktexas@hammerle.com.  Employment opportunities available.

This article does not constitute legal advice.