To avoid unexpected tax bills, adequately disclose your gifts

Description

Abstract: If a person transfers business interests or other assets to family members or friends, the IRS generally has three years to challenge their value for gift tax purposes or to claim that a transfer the person treated as a nongift was in fact a gift or partial gift. However, the three-year statute of limitations period doesn’t begin to run until the person “adequately discloses” the transfer to the IRS. Otherwise, the IRS can come after the person for unpaid gift taxes, plus penalties and interest, years or even decades later. This article details the requirements for adequately disclosing a gift with the IRS.