The federal gift tax is a tax on the transfer of property from one individual (the donor) to another (the donee) when the donor receives nothing—or less than full value—in return. The tax applies whether the donor intends the transfer to be a gift or not.

The gift tax applies to the transfer of a gift of any type of property. You make a gift if you give property (including money) or the use of or income from property without expecting to receive something of at least equal value in return. If you sell something at less than its full value or if you make an interest-free or reduced-interest loan, you may be making a gift.

For additional information, see Internal Revenue Service (IRS) Form 709 and its instructions.

The federal gift tax is applicable to all individuals in the United States, including those residing in Illinois (IL). It is imposed on the transfer of property by one person (the donor) to another (the donee) without adequate consideration in return. This tax is relevant regardless of the donor's intention for the transfer to be a gift. The tax encompasses all types of property transfers, whether it's money, real estate, or other assets. If a person provides property or money to someone else without receiving something of equal value, or if they sell something for less than its market value, or extend a loan without interest or at a below-market interest rate, it may be considered a gift for tax purposes. The donor is typically responsible for paying the gift tax and must file IRS Form 709 if the gift exceeds the annual exclusion limit. The annual exclusion amount is adjusted periodically for inflation. It's important to consult with an attorney or tax advisor to understand the specific implications of the federal gift tax and any potential state-level tax obligations or exemptions that may apply.