Gift Tax

Well, you certainly should file a gift tax return - that's what the law says. I doubt there will be much of a penalty if you don't. On the other hand you never know what the future holds, and if you don't file a return, the statute of limitation will never run on the gift, so the IRS could come back years from now and cause trouble.

But perhaps it's not necessary - If your sister is your only sibling, you have no children and your parents are both deceased, you could do a qualified disclaimer (which has to be done within nine months). With that, the disclaimed amount will be deemed to have gone directly to the person it would have gone to if you had died first - perhaps your sister. In that case no gift tax return is required because that money will be considered to have gone to her directly rather than through you.

"Gecko" wrote in message news: snipped-for-privacy@googlegroups.com... An individual receives a $250000 life insurance payment and decides to give his sister half of it. This person has modest income and will probably never have deal with the estate tax. Should he file a gift tax return? ======= Yes, but he may not have any tax due if he applies part of his unified credit.

If the recipient of the death benefit had no children, and his sister is his only sibling (assuming their parents are not alive), then he can do a qualified disclaimer (within 9 months of the death) and there will be no gift tax consequences of any kind.