4 Pages Posted: 20 Aug 2012
Date Written: August 13, 2012
Gifts of tangible personal property and closely-held business interests typically are made without a paper trail (e.g., cancelled check or deed recording). Because gift tax returns are not due until April 15 of the calendar year following the transfer, a non-compliant taxpayer can game the system by taking a “wait and see” approach. For example, if a taxpayer makes a gift of valuable gold ring on January 1, and by December 31 the value of gold significantly declines to an all-time low, a taxpayer might choose to report the gift as occurring on the latter date. Similarly, if a taxpayer makes a gift of privately-held stock to a grantor retained annuity trust on January 1, and, likewise, the value of that stock declines to an all-time low by December 31, the taxpayer might claim that the gift never happened.
Professors Soled and Crawford propose reviving a quarterly gift tax return filing system applicable to all taxpayers whose aggregate taxable gifts equal or exceed $100,000 during a calendar quarter. Such a system would increase both compliance and revenue.
Keywords: gift tax, gifts, tax returns, closely held business interests, small business, tax compliance
JEL Classification: K34, K39
Suggested Citation: Suggested Citation
Soled, Jay A. and Crawford, Bridget J., Gift Taxes, Valuation, and the Need for Quarterly Information Returns (August 13, 2012). Tax Notes, Vol. 136, No. 7, 2012. Available at SSRN: https://ssrn.com/abstract=2101142