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Thursday, August 16, 2012

Soled & Crawford: Gift Taxes, Valuation, and the Need for Quarterly Information Returns

Tax AnalystsJay A. Soled (Rutgers Business School) & Bridget J. Crawford (Pace), Gift Taxes, Valuation, and the Need for Quarterly Information Returns, 136 Tax Notes 843 (Aug. 13, 2012):

Gifts of tangible personal property and closely held business interests typically are made without a paper trail. Because gift tax returns aren’t due until April 15 of the calendar year following the transfer, a noncompliant taxpayer can game the system by taking a wait-and-see approach. For example, if a taxpayer makes a gift of a valuable gold ring on January 1 and by December 31 the value of gold declines to an all-time low, the taxpayer might choose to report the gift as being made on a later date. Similarly, if a taxpayer makes a gift of privately held stock to a grantor retained annuity trust on January 1 and the value of that stock declines to an all-time low by December 31, the taxpayer might claim that the gift was never made.

Soled and Crawford propose reviving a quarterly gift tax return filing system applicable to all taxpayers whose aggregate taxable gifts equal or exceed $100,000 during a calendar quarter. That system would increase both compliance and revenue. 

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