What is a taxable gift?

Well, the gift tax law specifically provides that medical or educational payments made by the "gift" giver directly to the medical or educational institution do not count as gifts for gift tax purposes. So if Granny writes your tuition check straight to Hahvahd, no gift. If she writes it to you, gift.

See above.

I'll bet that's a gift.

That's a gift for the FMV of the car.

That's a gift (so are Christmas and birthday presents).

I'd say a freewill gift is a "'gift for tax purposes'" right off the bat.

I would posit that: (a) under the law, pretty much everything you'd consider a gift is a gift under the tax rules. (Aside from "gifts" from employers.) (b) enforcing it is pretty much impossible except for when money or titled property actually changes hands. And even then it's probably pretty hard.

-- Rich Carreiro snipped-for-privacy@rlcarr.com

Until a child is emancipated (see state law to see at which age emancipation takes place) the parents have an obligation to provide support. That support is not considered gifts. Once the child is emancipated, then whatever the parents provide their child other than direct payments to providers of medical services and institutions of higher learning is a gift and falls under the Gift Tax rules.

Gifts between spouses are unlimited. Gifts between adults whether they cohabitate or not fall under the Gift Tax rules.

If you are asking whether the government is actively tracking down the dude who gave his girlfriend a $25000 diamond bracelet and didn't file a gift tax return.... the answer is no unless they are actively auditing that individual for some other reason and the gift comes to light. Ditto for gifts between parents and their children.

If the spouse giving the gift is a US citizen and the spouse receiving the gift is not, there is a limit. In 2008, it looks like the limit is $128,000.

It only applies to a spouse who is a nonresident alien. Lawful permanent residents are treated the same as citizens.

Does this imply that many, maybe even most, gift tax returns are wrong, and that the donors may not realize that they've perjured themselves in signing the returns?

I mean, birthday presents that're worth let's say a coupla hundred bucks, if left off a gift tax return could put the donor in harm's way if the IRS were doing its job more diligently???

No, since one must know one is stating a falsehood in order to commit perjury.

What about the ones that know, should know, have every reason to know, and - more my point, I guess - the preparers of the returns? You've described the "innocence" of the ones that don't know what they don't know. What about the others?

Can you cite supporting sources?

My impression is that LPRs are treated like NRAs for estate and gift taxes, and have limits on both gifts and inheritance. The usual remedy is a QDOT.

The actual rule is state in §2523 of the IRC. It says that gifts to non-citizen spouses are not granted the unlimited deduction of gifts to citizen spouses. There is no exception for permenant residents.

However the rule may have been different in the past. Under the regulations, §25.2523(a)(1)(a), it says,

"In the case of gifts made prior to July 14, 1988, no marital deduction is allowed with respect to a gift if, at the time of the gift, the donor is a nonresident not a citizen of the United States. Further, in the case of gifts made on or after July 14, 1988, no marital deduction is allowed (regardless of the donor's citizenship or residence) for transfers to a spouse who is not a citizen of the United States at the time of the transfer."

Stu

Looks like I screwed the pooch on this one.......

Don't feel bad - everyone makes a mistake now and then.

Even me! Remember that time I thought I'd made a mistake? Turns out I was wrong. ;-)

Stu