Does the recipient of a "gift" exceeding the annual allowance in value have to declare it on their taxes?

Asked over 1 year ago - Morro Bay, CA

In a situation where a "gift" was made to one person involving several hundred thousand dollars in the form of a coin collection, do I understand correctly that the giver of this gift is required to file a Federal Tax Form 709 and pay any taxes required? Is the recipient required to declare this "gift" on his Federal (and/or State) taxes even though he is not responsible for paying the taxes on this "gift"? If so, what are the penalties for not doing so?

Attorney answers (4)

  1. Amanda Marie Cook

    Contributor Level 15

    12

    Lawyers agree

    Answered . The donOR is responsible for gift tax; the donEE pays nothing in gift tax. The donor should file a Form 709. In most instances, it will not result in any actual gift tax, but it will impact their estate tax so they should keep a copy of the filed 709 with their other estate planning documents. Failure to file a 709 carries heavy consequences. Additionally, because coin collections fluctuate in value over time, you should speak with your tax advisor concerning the basis of the collection and income tax treatment of disposal of the collection.

    THESE COMMENTS ARE NOT LEGAL ADVICE. They are provided for informational purposes only. Actual legal advice can... more
  2. Michael Raymond Daymude

    Pro

    Contributor Level 20

    9

    Lawyers agree

    Answered . No. The recipient does not pay a gift tax and has no reporting requirements. However, the giver should report the gift since it exceeds the annual exclusion.

    I am licensed in California only and my answers on Avvo assume California law. Answers provided by me are for... more
  3. Joseph Franklin Pippen Jr.

    Pro

    Contributor Level 20

    5

    Lawyers agree

    Answered . No-the giver has no requirements.

    The answer given does not imply that an attorney-client relationship has been established and your best course of... more
  4. John P Fazzio III

    Pro

    Contributor Level 16

    4

    Lawyers agree

    Answered . Donor pays and has to file a gift tax return.

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