Gift Tax Consequences of Luxury Hospitality: An Introduction

115 Tax Notes 1157 (2023)

7 Pages Posted: 20 Jun 2023

See all articles by Bridget J. Crawford

Bridget J. Crawford

Pace University School of Law

Victoria J. Haneman

Creighton University - School of Law

Jonathan G. Blattmachr

Milbank LLP

Date Written: May 15, 2023


A mother invites her adult children on vacation. A father lets his adult son borrow the family car to go on a short personal trip. One friend treats another to dinner. In most cases like these, there are no meaningful gift tax questions, either because the IRS has never sought to tax them or because the value of any gift is small enough to be covered by the annual exclusion. But what of cases where a mother rents a 14-bedroom mansion for her children to stay in an exclusive resort town? What of the father who allows his daughter to borrow his private jet? What of the wealthy friend who invites his friends on an all-expenses-paid, nine-day cruise to multiple tropical islands? Neither the tax code nor Treasury regulations provide clear guidance on whether these transfers are subject to the gift tax.

After reviewing the basic principles of gift taxation, this article uses illustrative hypotheticals to explore arguments for and against the taxation of gifts of luxury hospitality. The authors argue that except in cases of “no additional cost,” gifts of luxury travel, meals, and the use of property should be treated as taxable gifts. Allowing those gifts to escape taxation simply because they are transfers of the use of property (as opposed to an outright gift of cash or a purchase on behalf of one’s intended donees) would be inconsistent with the goal of taxing the largest wealth transfers. Gifts of luxury hospitality are likely unusual enough that asking taxpayers to keep track of them is not an undue burden. These gifts are also of sufficiently high value that it is difficult to imagine Congress would want them to escape taxation, even while maintaining an appropriate distance between the tax law and everyday matters among family and friends.

Keywords: gift tax, luxury travel, hospitality, private jet

JEL Classification: K34

Suggested Citation

Crawford, Bridget J. and Haneman, Victoria J. and Blattmachr, Jonathan G., Gift Tax Consequences of Luxury Hospitality: An Introduction (May 15, 2023). 115 Tax Notes 1157 (2023), Available at SSRN:

Bridget J. Crawford (Contact Author)

Pace University School of Law ( email )

78 North Broadway
White Plains, NY 10603
United States

Victoria J. Haneman

Creighton University - School of Law ( email )

2500 California Plaza
Omaha, NE 68178
United States
8586827656 (Phone)

Jonathan G. Blattmachr

Milbank LLP ( email )

55 Hudson Yards
New York, NY 10001-2163
United States
212-530-5000 (Phone)

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