Filing a Gift Tax Return for Non-Gifts Can Be the Best
Insurance Against Unpleasant Tax Surprises Down The Road
Eileen Cozzi, JD, LLM
Did you know that it may be advantageous to file a gift tax
return when transferring property to, or for the benefit of, a
family member even when a gift tax return is not required?
Transfers such as a sale to a family member or to a grantor trust,
where the value of the item sold could be in dispute, are non-gifts
that should be reported on a gift tax return. If a gift tax return
is filed that meets the IRS' "adequate disclosure"
requirements, the three-year statute of limitations clock
starts.
Avoiding future tax surprises
Generally, the IRS has three years after a gift tax return is
filed to challenge the value of a transaction for gift tax purposes
or to assert that a non-gift was, in fact, a partial gift. However,
there is no statute of limitations barring assessment if no gift
tax return is filed, if the gift tax return is
