CODE SECTIONS 1000-1031; REGULATIONS 108
A GIFT TAX is imposed on the transfer of property by gift and applies to all net gifts made during the year by a citizen or resident and to all gifts of property situated in the United States made by a nonresident alien.* On the net value of the gifts, computed to reflect specified exclusions and exemptions, the tax is imposed at progressive rates, ranging from 2.25 percent on the first $5,000 to 57.75 percent on the aggregate taxable value of gifts in excess of $10,000,000. Any individual who gives more than $3,000, or property worth more than $3,000, to any one person in any year is required to report the gift by March 15† of the succeeding year on Form 709 whether or not the gift is taxable, and to pay the tax, if any. Corporations, trusts, and other entities are not required to file, but gifts made by them must be reported by the individual stockholder, partner, or other participant. If the donor fails to file the return or pay the tax, then the donee (i.e., the recipient) becomes liable, and in any event the donee must report the gift's receipt on Form 710.
On Form 709 each gift to each donee must be separately described and valued. If the gift was made by a married person, each spouse may report one half. If the gift was made to the donor's spouse, he or she may deduct one half. There may be deducted an exclusion of $3,000 of gifts (other than____________________