Tell All

Gift-giving: Inform the IRS thoroughly to avoid an audit.
Magazine Contributor
2 min read

This story appears in the December 2000 issue of Entrepreneur. Subscribe »

Thinking about giving out some generous gifts this month to ease April's tax bill? You'll now need to adhere to some new rules concerning gift-giving. In essence, if you provide the IRS with adequate information regarding a gift, the tax agency has only three years to audit your return and won't be allowed to reopen it in a later estate audit. If you fail to provide adequate information, the IRS can audit you any time. As you know, taxpayers can make annual gifts of up to $10,000 ($20,000 per couple) tax-free to children, grandchildren or anyone else they designate.

How will the IRS know whether you've disclosed everything you should disclose? It says if you're giving anyone more than $10,000 in one year, you must file a gift-tax return by April 15 of the next year. Among other things, the new rules require you to describe the gift and give the name and relationship between the giver and the recipient. If you're giving away real estate or an interest in the family business, you must describe the valuation method used to determine its value or provide an appraisal from a qualified appraiser.


Joan Szabo is a writer in Great Falls, Virginia, who has reported on tax issues for more than 13 years.

loading...
More from Entrepreneur
Entrepreneur Select: A Fund For Entrepreneurs, By Entrepreneurs

Entrepreneurs require more than just money, which is why we aim to empower you, as well as act as a catalyst for value creation.

Discover the franchise that’s right for you by answering some quick questions about
  • Which industry you’re interested in
  • Why you want to buy a franchise
  • What your financial needs are
  • Where you’re located
  • And more
Try a risk-free trial of Entrepreneur’s BIZ PLANNING PLUS powered by LivePlan for 60 days:
  • Get step-by-step guidance for writing your plan
  • Gain inspiration from 500+ sample plans
  • Utilize business and legal templates
  • And much more

Latest on Entrepreneur