Gift Tax

<div class="Section1">It is a dollar amount ($5,541,800 in 2025 (projected), $5,389,800 in 2024, $5,113,800 in 2023, $4,769,800 in 2022, $4,625,800 in 2021, $4,577,800 in 2020, $4,505,800 in 2019, and $4,419,800 in 2018)<a href="#_ftn1" name="_ftnref1">¹</a> that is credited against the gift tax computed as shown in Q <a href="javascript:void(0)" class="accordion-cross-reference" id="892">892</a>.<a href="#_ftn2" name="_ftnref2">²</a> In 2010, the credit exempted $1,000,000 of taxable gifts from the gift tax (the dollar amount exempted is referred to as the &ldquo;gift tax applicable exclusion amount&rdquo;). For 2011, the amount increased to $5,000,000, and was adjusted for inflation to $5,490,000 in 2017, and the 2017 &#8197;Tax Act doubled the amount to $11,800,000 in 2018, $11,400,000 in 2019, $11,580,000 in 2020, $11,700,000 in 2021, $12,060,000 in 2022, $12,920,000 in 2023, $13,610,000 in 2024 and $13,990,000 in 2025 (projected).<a href="#_ftn3" name="_ftnref3">³</a> Any gifts made over the gift tax applicable exclusion amount are taxed at a 40 percent rate (in 2013 and thereafter). (For application of the unified credit to the federal estate tax, see Q <a href="javascript:void(0)" class="accordion-cross-reference" id="861">861</a>.) The credit is referred to as &ldquo;unified&rdquo; because the current credit applies to the gift tax (section 2505), the GST tax (section 2641) or the estate tax (section 2010).<div class="Section1"><br /> <br /> The amount of unified credit allowed against the tax on gifts made in any calendar year cannot exceed the dollar amount of credit applicable to the period in which the gifts were made, reduced by the sum of the amounts of unified credit allowed the donor against gifts made in all prior calendar periods, and reduced further by the rule explained in the next paragraph (but in no event can the allowable credit exceed the amount of the tax). The unused exemption of a deceased spouse may be transferred to the surviving spouse to increase the gift or estate applicable exclusion amount for the surviving spouse.<a href="#_ftn4" name="_ftnref4">⁴</a><br /> <br /> The unified credit was enacted by the Tax Reform Act of 1976. Under prior law, separate exemptions were provided for estate and gift taxes. The gift tax specific exemption was $30,000 for each donor (or $60,000 if the donor&rsquo;s spouse joined in making the gift). The exemption was not applied automatically, as in the case of the unified credit, but had to be elected by the donor, and once used was gone. The law provides that as to gifts made after September&nbsp;8, 1976, and before January&nbsp;1, 1977, if the donor elected to apply any of his lifetime exemption to such gifts, his unified credit is reduced by an amount equal to 20 percent of the amount allowed as a specific exemption.<a href="#_ftn5" name="_ftnref5">⁵</a> (The unified credit is not reduced by any amount allowed as a specific exemption for gifts made prior to September&nbsp;9, 1976.)<br /> <br /> Under 2010 TRA, a donor can make gifts, without incurring a gift tax liability, up to the difference between the current year&rsquo;s applicable exclusion amount and the prior taxable gifts.<br /> <br /> By means of the &ldquo;split gift&rdquo; provision (see Q <a href="javascript:void(0)" class="accordion-cross-reference" id="904">904</a>), a married couple can effectively use each other&rsquo;s unified credit.<br /> <br /> </div><div class="refs"><br /> <br /> <hr align="left" size="1" width="33%"><br /> <br /> <a href="#_ftnref1" name="_ftn1">1</a>.&nbsp;&nbsp;&nbsp; Rev. Proc. 2016-55, Rev. Proc. 2017-58, Rev. Proc. 2018-57, Rev. Proc. 2019-44, Rev. Proc. 2020-45, Rev. Proc. 2021-45, Rev. Proc. 2022-38, Rev. Proc. 2023-34, Rev. Proc. 2024-40.<br /> <br /> <a href="#_ftnref2" name="_ftn2">2</a>.&nbsp;&nbsp;&nbsp; IRC &sect; 2505, as amended by EGTRRA 2001.<br /> <br /> <a href="#_ftnref3" name="_ftn3">3</a>.&nbsp;&nbsp;&nbsp; Rev. Proc. 2016-55, Pub. Law. No. 115-97 (the 2017 Tax Act), Rev. Proc. 2018-18, Rev. Proc. 2018-57, Rev. Proc. 2019-44, Rev. Proc. 2020-45, Rev. Proc. 2021-45, Rev. Proc. 2022-38, Rev. Proc. 2023-34, Rev. Proc. 2024-40.<br /> <br /> <a href="#_ftnref4" name="_ftn4">4</a>.&nbsp;&nbsp;&nbsp; IRC &sect;&sect; 2505(a)(i); 2010.<br /> <br /> <a href="#_ftnref5" name="_ftn5">5</a>.&nbsp;&nbsp;&nbsp; IRC &sect; 2505(c).<br /> <br /> </div></div><br />

<div class="Section1">Yes. In general, a deduction is allowed for the entire value of gifts to qualified charitable organizations.<a href="#_ftn1" name="_ftnref1">¹</a><div></div><div>Where a donor makes a gift of an interest in property (other than a remainder interest in a personal residence or farm or an undivided portion of the donor&rsquo;s entire interest in property or certain gifts of property interests exclusively for conservation purposes) to a qualified charity, and an interest in the same property is retained by the donor or is given to a donee that is not a charity, no charitable deduction is allowed for the interest given the charity unless:</div><div class="Section1"><br /> <p style="padding-left: 40px;">(1)&nbsp;&nbsp;&nbsp;&nbsp; in the case of a remainder interest, such interest is in a trust which is a charitable remainder annuity trust (see Q <a href="javascript:void(0)" class="accordion-cross-reference" id="8087">8087</a>) or a charitable remainder unitrust (see Q <a href="javascript:void(0)" class="accordion-cross-reference" id="8088">8088</a>) or a pooled income fund (see Q <a href="javascript:void(0)" class="accordion-cross-reference" id="8096">8096</a>); or</p><br /> <p style="padding-left: 40px;">(2)&nbsp;&nbsp;&nbsp;&nbsp; in the case of any other interest (such as an interest in the income from a short term trust), such interest is in the form of a guaranteed annuity or is a fixed percentage of the fair market value of the property distributed yearly (to be determined yearly).<a href="#_ftn2" name="_ftnref2">²</a></p><br /> A charitable contribution deduction is allowable for a gift to charity of a legal remainder interest in the donor&rsquo;s personal residence even though the interest conveyed to charity is in the form of a tenancy in common with an individual.<a href="#_ftn3" name="_ftnref3">³</a><br /> <br /> If an individual creates a qualified charitable remainder trust in which his spouse is the only non-charitable beneficiary other than certain ESOP remainder beneficiaries, the grantor will receive a charitable contributions deduction for the value of the remainder interest.<a href="#_ftn4" name="_ftnref4">⁴</a><br /> <br /> </div><div class="refs"><br /> <br /> <hr align="left" size="1" width="33%"><br /> <br /> <a href="#_ftnref1" name="_ftn1">1</a>.&nbsp;&nbsp;&nbsp; IRC &sect;&sect; 2522(a), 2522(b).<br /> <br /> <a href="#_ftnref2" name="_ftn2">2</a>.&nbsp;&nbsp;&nbsp; IRC &sect; 2522(c); Rev. Rul. 77-275, 1977-2 CB 346.<br /> <br /> <a href="#_ftnref3" name="_ftn3">3</a>.&nbsp;&nbsp;&nbsp; Rev. Rul. 87-37, 1987-1 CB 295, revoking Rev. Rul. 76-544, 1976-2 CB 288.<br /> <br /> <a href="#_ftnref4" name="_ftn4">4</a>.&nbsp;&nbsp;&nbsp; IRC &sect; 2522(c)(2).<br /> <br /> </div></div><br />

The IRS created a gift tax reporting safe harbor for Trump account contributions made on behalf of children under age 18 via Revenue Procedure 2026-25.

<div class="Section1">A gift of property to a corporation generally represents a gift of a future interest in the property (so that it will not qualify for the gift tax annual exclusion, see Q <a href="javascript:void(0)" class="accordion-cross-reference" id="906">906</a>) to the individual shareholders to the extent of their proportionate interests in the corporation.<a href="#_ftn1" name="_ftnref1">¹</a> Also a gift for the benefit of a corporation is a gift of a future interest in the property to its shareholders and does not qualify for the annual exclusion.<a href="#_ftn2" name="_ftnref2">²</a> In contrast, gifts made to individual partnership capital accounts have been treated as gifts of a present interest which qualify for the annual exclusion where the partners were free to make immediate withdrawals of the gifts from their capital accounts.<a href="#_ftn3" name="_ftnref3">³</a> However, annual exclusions were denied for gifts of limited partnership interests where (1) the general partner could retain income for any reason whatsoever, (2) limited partnership interests could not be transferred or assigned without the permission of a supermajority of other partners, and (3) limited partnership interests generally could not withdraw from the partnership or receive a return of capital contributions for many years into the future.<a href="#_ftn4" name="_ftnref4">⁴</a> Similarly, annual exclusions were denied for gifts of business interests where the beneficiaries were not free to withdraw from the business entity, could not sell their interests, and could not control whether any income would be distributed (and no immediate income was expected).<a href="#_ftn5" name="_ftnref5">⁵</a><div class="refs"><br /> <br /> <hr align="left" size="1" width="33%"><br /> <br /> <a href="#_ftnref1" name="_ftn1">1</a>.&nbsp;&nbsp;&nbsp; Treas. Reg. &sect; 25.2511-1(h)(1); Rev. Rul. 71-443, 1971-2 CB 337; <em>Stinson v. U.S.</em>, 2000-1 USTC &para; 60,377 (7th Cir. 2000); <em>Hollingsworth v. Comm.</em>, 86 TC 91 (1986).<br /> <br /> <a href="#_ftnref2" name="_ftn2">2</a>.&nbsp;&nbsp;&nbsp; Let. Rul. 9114023.<br /> <br /> <a href="#_ftnref3" name="_ftn3">3</a>.&nbsp;&nbsp;&nbsp; <em>Wooley v. U.S.</em>, 736 F. Supp.&nbsp;1506, 90-1 USTC &para; 60,013 (S.D. Ind. 1990).<br /> <br /> <a href="#_ftnref4" name="_ftn4">4</a>.&nbsp;&nbsp;&nbsp; TAM 9751003.<br /> <br /> <a href="#_ftnref5" name="_ftn5">5</a>.&nbsp;&nbsp;&nbsp; <em>Hackl v. Comm.</em>, 335 F.3d 664, 2003-2 USTC &para; 60,465 (7th Cir. 2003), <em>aff&rsquo;g</em> 118 TC 279 (2002).<br /> <br /> </div></div><br />

<div class="Section1"><br /> <br /> A "qualified transfer" is not considered a gift for gift tax purposes. A "qualified transfer" means any amount paid on behalf of an individual–<br /> <p style="padding-left: 40px;">(A)    as tuition to an educational organization<a href="#_ftn1" name="_ftnref1">¹</a> for the education or training of such individual, or</p><br /> <p style="padding-left: 40px;">(B)     to any person who provides medical care<a href="#_ftn2" name="_ftnref2">²</a> with respect to such individual as payment for such medical care.<a href="#_ftn3" name="_ftnref3">³</a> A technical advice memorandum treated tuition payments for future years as qualified transfers where the payments were nonrefundable.<a href="#_ftn4" name="_ftnref4">⁴</a></p><br /> <br /> </div><br /> <div class="refs"><br /> <br /> <hr align="left" size="1" width="33%" /><br /> <br /> <a href="#_ftnref1" name="_ftn1">1</a>.    IRC § 170(b)(1)(A)(ii).<br /> <br /> <a href="#_ftnref2" name="_ftn2">2</a>.    As defined in IRC § 213(d).<br /> <br /> <a href="#_ftnref3" name="_ftn3">3</a>.    IRC § 2503(e); Rev. Rul. 82-98, 1982-1 CB 141.<br /> <br /> <a href="#_ftnref4" name="_ftn4">4</a>.    Let. Rul. 200602002; TAM 199941013.<br /> <br /> </div>

<div class="Section1">A gift of property to a minor, whether in trust or otherwise, is not considered a gift of a future interest in property, so that it will qualify for the gift tax annual exclusion, if the terms of the transfer satisfy all the following conditions:</div><br /> <div class="Section1"><br /> <p style="padding-left: 40px;">(1)     Both the property itself and its income may be expended by or for the benefit of the donee before he attains the age of 21 years;</p><br /> <p style="padding-left: 40px;">(2)     Any portion of the property and its income not disposed of under (1) will pass to the donee when he attains the age of 21 years; and</p><br /> <p style="padding-left: 40px;">(3)     Any portion of the property and its income not disposed of under (1) will be payable either to the estate of the donee or as he may appoint under a general power of appointment if he dies before attaining the age of 21 years.<a href="#_ftn1" name="_ftnref1">¹</a></p><br /> A gift to a minor under the Uniform Gifts to Minors Act or under the Uniform Transfers to Minors Act generally is a gift of a present interest and qualifies for the annual exclusion.<a href="#_ftn2" name="_ftnref2">²</a> Most states in recent years have adopted the later Uniform Transfers to Minors Act, which allows for any kind of property, real or personal, tangible or intangible, to be transferred under the Act. Other states have amended their Uniform Gifts to Minors Act to provide for gifts of various kinds of property ranging from real estate to partnership interests and other tangible and intangible interests in property. Originally, the Uniform Act provided for gifts of only money or securities. The allowance of the exclusion is not affected by the amendment of a state's Uniform Act lowering the age of majority and thus requiring that property be distributed to the donee at age 18.<a href="#_ftn3" name="_ftnref3">³</a> The revenue rulings cited in this paragraph base the allowance of the exclusion on the assumption that gifts under the Uniform Act come within the purview of IRC Section 2503(c). Gifts to minors under IRC Section 2503(c) must pass to the donee on his attaining age 21. If a state statute varies from the Uniform Act by providing that under certain conditions custodianship may be extended past the donee's age 21, gifts made under those conditions would not qualify for the exclusion. For a state-by-state summary of the types of property which can be given under, and the adult age for purposes of, the Uniform Act, see www.TaxFactsUpdates.com.<br /> <br /> </div><br /> <div class="refs"><br /> <br /> <hr align="left" size="1" width="33%" /><br /> <br /> <a href="#_ftnref1" name="_ftn1">1</a>.    IRC § 2503(c); Treas. Reg. § 25.2503-4(a).<br /> <br /> <a href="#_ftnref2" name="_ftn2">2</a>.    Rev. Rul. 59-357, 1959-2 CB 212; Rev. Rul. 73-287, 1973-2 CB 321.<br /> <br /> <a href="#_ftnref3" name="_ftn3">3</a>.    Rev. Rul. 73-287, 1973-2 CB 321.<br /> <br /> </div>

<p> By means of the "split gift" provision (see Q <a href="javascript:void(0)">904</a>), a married couple can effectively use each other's annual exclusions. Thus, if, in 2024, A makes a $36,000 gift of securities to his child, C, and A's spouse, B, joins in making the gift (by signifying her consent on the gift tax return), the gift would be considered as having been made one-half by each, the exclusion is effectively doubled, and no gift tax would have to be paid (assuming neither A nor B made any other gifts to C during the calendar year).<a href="#_ftn1">¹</a> However, if A and B join in making the same gift to F, child of A's brother D and spouse E, while at the same time D and E make similar gifts to C and F, the scheme does not effectively again double the exclusion.<a href="#_ftn2">²</a></p><p> If the spouse of the donor is not a United States citizen, the annual exclusion for a transfer from the donor spouse to the non-citizen spouse is increased from $10,000 to $100,000 (as indexed to $152,000 for 2018, $155,000 for 2019, $157,000 in 2020, $159,000 in 2021, $164,000 in 2022, $175,000 in 2023, $185,000 in 2024, $190,000 in 2025 and $194,000 in 2026)<a href="#_ftn3">³</a> provided the transfer would otherwise qualify for the marital deduction if the donee spouse were a United States citizen. The $100,000 amount is adjusted for inflation, as is the $10,000 amount.<a href="#_ftn4">⁴</a> However, the marital deduction is not available for a transfer to a spouse who is not a United States citizen (see Q <a href="javascript:void(0)">912</a>). </p><p><hr align="left" size="1" width="33%"></hr></p><p> <a href="#_ftnref1">1</a>. IRC § 2513; Treas. Reg. § 25.2513-1. </p><p> <a href="#_ftnref2">2</a>. TAM 8717003; <em>Schuler v. Comm.</em>, 282 F.3d 575, 2002-1 USTC ¶ 60,432 (8th Cir. 2002); <em>Sather v. Comm.</em>, 251 F.3d 1168 (8th Cir. 2001). </p><p> <a href="#_ftnref3">3</a>. Rev. Proc. 2017-58, Rev. Proc. 2018-57, Rev. Proc. 2019-44, Rev. Proc. 2020-45, Rev. Proc. 2021-45, Rev. Proc. 2022-38, Rev. Proc. 2023-34, Rev. Proc. 2024-40, Rev. Proc. 2025-32. </p><p> <a href="#_ftnref4">4</a>. IRC § 2523(i). </p>

<p> The gift tax marital deduction is a deduction for the entire value of gifts made between spouses.<a href="#_ftn1">¹</a> The deduction does not apply, however, to a gift of a "nondeductible terminable interest" in property.<a href="#_ftn2">²</a> A "terminable interest" in property is an interest which will terminate or fail on the lapse of time or on the occurrence or failure to occur of some contingency. Life estates, terms for years, annuities, patents, and copyrights are therefore terminable interests. However, a bond, note, or similar contractual obligation, the discharge of which would not have the effect of an annuity or term for years, is not a terminable interest.<a href="#_ftn3">³</a></p><p> In general, if a donor transfers a terminable interest in property to the donee spouse, the marital deduction is disallowed with respect to the transfer if the donor spouse also (1) transferred an interest in the same property to another donee, <em>or</em> (2) retained an interest in the same property in himself, <em>or</em> (3) retained a power to appoint an interest in the same property, <em>and</em> (4) gave the other donee, himself, or the possible appointee the right to possess or enjoy any part of the property after the termination or failure of the interest transferred to the donee spouse.<a href="#_ftn4">⁴</a> <em>However</em>, a terminable interest in property qualifies for the marital deduction (referred to as "QTIP") if the donee spouse is given (1) a right to the income from the property for life and a general power of appointment over the principal; or (2) a "qualifying income interest for life" in property transferred by the donor spouse as to which the donor must make an election (on or before the date, including extensions, for filing a gift tax return with respect to the year in which the transfer was made–see Q <a href="javascript:void(0)">915</a>) to have the marital deduction apply. The QTIP regulations provide an exception to the estate tax inclusion issues that arise under Sections 2036 and 2038.<a href="#_ftn5">⁵</a></p><p> The donee spouse has a "qualifying income interest for life" if (1) the donee spouse is entitled to all the income from the property, payable annually or at more frequent intervals, and (2) no person has a power to appoint any part of the property to any person other than the donee spouse during the donee spouse's lifetime.<a href="#_ftn6">⁶</a> Also, the interest of a donee spouse in a joint and survivor annuity in which only the donor and donee spouses have a right to receive payments during such spouses' joint lifetimes is treated as a "qualifying income interest for life" unless the donor spouse irrevocably elects otherwise within the time allowed for filing a gift tax return.<a href="#_ftn7">⁷</a></p><p> In the two exceptions to the nondeductible terminable interest rule explained above, income producing property is contemplated. If a gift of non-income producing property in a form to comply with either of the two exceptions is proposed, Treasury Regulation Section 25.2523(e)-1(f) should be read carefully. A marital deduction has been disallowed for a transfer to an irrevocable trust where state law provided that the interest given the spouse would be revoked upon divorce and the grantor had not provided in the trust instrument that the trust would not be revoked upon divorce.<a href="#_ftn8">⁸</a></p><p> If the spouse of the donor is not a United States citizen, the marital deduction is not available for a transfer to such a spouse. However, in such a case, the annual exclusion (see Q <a href="javascript:void(0)">905</a>) for the transfer from the donor spouse to the non-citizen spouse is increased from $10,000 as indexed ($19,000 in 2025-2026, $18,000 in 2024, $17,000 in 2023, $16,000 in 2022, $15,000 in 2018-2021) to $100,000 as indexed ($194,000 in 2026, $190,000 in 2025, $185,000 in 2024, $175,000 in 2023, $164,000 in 2022, $159,000 in 2021, $157,000 in 2020, $155,000 in 2019, and $152,000 in 2018)<a href="#_ftn9">⁹</a> (provided the transfer would otherwise qualify for the marital deduction if the donee spouse were a United States citizen). The $100,000 amount is adjusted for inflation, as is the $10,000 amount (see Q <a href="javascript:void(0)">905</a>).<a href="#_ftn10">¹⁰</a></p><p><hr align="left" size="1" width="33%"></hr></p><p> <a href="#_ftnref1">1</a>. IRC § 2523(a). </p><p> <a href="#_ftnref2">2</a>. IRC § 2523(b); Treas. Reg. §§ 25.2523(a)-1(b)(2), 25.2523(b)-1. </p><p> <a href="#_ftnref3">3</a>. Treas. Reg. § 25.2523(b)-1(a)(3). </p><p> <a href="#_ftnref4">4</a>. Treas. Reg. § 25.2523(b)-1(a)(2). </p><p> <a href="#_ftnref5">5</a>. Treas. Reg. § 25.2523(f)-1(d)(1). </p><p> <a href="#_ftnref6">6</a>. IRC §§ 2523(e), 2523(f). </p><p> <a href="#_ftnref7">7</a>. IRC § 2523(f)(6). </p><p> <a href="#_ftnref8">8</a>. TAM 9127005. </p><p> <a href="#_ftnref9">9</a>. Rev. Proc. 2017-58, Rev. Proc. 2018-57, Rev. Proc. 2019-44, Rev. Proc. 2020-45, Rev. Proc. 2021-45, Rev. Proc. 2022-38, Rev. Proc. 2023-34, Rev. Proc. 2024-40. </p><p> <a href="#_ftnref10">10</a>. IRC § 2523(i). </p>

<div class="Section1">It has been held that the gift of a portion of the donor's interest in real property, if under the terms of the transfer the donee receives the present unrestricted right to the immediate use, possession, and enjoyment of an ascertainable interest in the property, qualifies for the gift tax annual exclusion.</div><br /> <div class="Section1"><br /> <br /> If a donor transfers a specified portion of real property subject to an "adjustment clause" (i.e., under terms that provide that if the IRS subsequently determines that the value of the specified portion exceeds the amount of the annual exclusion, the portion of property given will be reduced accordingly, or the donee will compensate the donor for the excess), the IRS has ruled the adjustment clause will be disregarded for federal tax purposes.<a href="#_ftn1" name="_ftnref1">¹</a><br /> <br /> A donor's gratuitous payment of the monthly amount due on the mortgage on a house owned in joint tenancy by others has been held a present interest gift to the joint tenants in proportion to their ownership interests.<a href="#_ftn2" name="_ftnref2">²</a><br /> <br /> </div><br /> <div class="refs"><br /> <br /> <hr align="left" size="1" width="33%" /><br /> <br /> <a href="#_ftnref1" name="_ftn1">1</a>.    Rev. Rul. 86-41, 1986-1 CB 300.<br /> <br /> <a href="#_ftnref2" name="_ftn2">2</a>.    Rev. Rul. 82-98, 1982-1 CB 141.<br /> <br /> </div>

<div class="Section1">The gift tax annual exclusion is an exclusion of $10,000 as indexed ($19,000 in 2025 (projected), $18,000 in 2024, $17,000 in 2023, $16,000 in 2022, $15,000 in 2018-2021)<a href="#_ftn1" name="_ftnref1">¹</a> per calendar year per donee applied to gifts of a present interest in property. The $10,000 amount is adjusted for inflation, rounded down to the next lowest multiple of $1,000, after 1998. The exclusion is not cumulative; that is, an exclusion unused in one year cannot be carried over and used in a future year. A gift of a present interest is one in which the donee has the right to immediate possession, use, and enjoyment of the property.</div><br /> <div class="Section1"><br /> <p class="PA">The exclusion does not apply to gifts of a future interest in property, i.e., the right to use and enjoy the property only in the future. For example, if G transfers income producing property in trust, the terms of which provide that the income from the trust property will be paid to A for lifetime and upon A's death the trust property will be paid to B free of trust, A's life income interest would be a present interest gift and B's remainder interest would be a future interest gift. G would be allowed to exclude from the value of gifts reported on the gift tax return the value of A's life income interest up to $19,000 (in 2025, assuming G made no other present interest gifts to A during the calendar year), but he would not be able to exclude any of the value of B's remainder interest. If the trustee were given discretion to withhold payments of income to A and add such amounts to the trust corpus, A's income interest would not be a present interest, and G would not be allowed to claim any exclusion.</p><br /> Substance over form analysis may be applied to deny annual exclusions where indirect transfers are used in an attempt to obtain inappropriate annual exclusions for gifts to intermediate recipients.<a href="#_ftn2" name="_ftnref2">²</a> For example, suppose A transfers $19,000 to each of B, C, and D in 2024. By arrangement, B, C, and D each immediately transfer $19,000 to E. The annual exclusion for A's indirect transfers to E is limited to $19,000 and A has made taxable gifts of $38,000 to E.<br /> <br /> An outright gift of a bond, note (though bearing no interest until maturity), or other obligation which is to be discharged by payments in the future is a gift of a present interest. Normally, a direct gift of shares of corporate stock is a present interest gift. However, if the gift is made subject to a stock transfer restriction agreement under which the donee is prohibited for a period of time from selling or pledging the stock, it has been held that the gift is one of a future interest which does not qualify for the gift tax annual exclusion.<br /> <br /> </div><br /> <div class="refs"><br /> <br /> <hr align="left" size="1" width="33%" /><br /> <br /> <a href="#_ftnref1" name="_ftn1">1</a>.    Rev. Proc. 2016-55, Rev. Proc. 2017-58, Rev. Proc. 2018-57, Rev. Proc. 2019-44, Rev. Proc. 2020-45, Rev. Proc. 2021-45, Rev. Proc. 2022-38, Rev. Proc. 2023-34, Rev. Proc. 2024-40.<br /> <br /> <a href="#_ftnref2" name="_ftn2">2</a>.    <em>Heyen v. U.S.</em>, 945 F.2d 359, 91-2 USTC ¶ 60,085 (10th Cir. 1991).<br /> <br /> </div>