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 transfers of property where the donor does not receive full value in return, and it is enforced regardless of the donor's intent. This includes money, property, or the use of property. In Minnesota, as in all states, the federal gift tax regulations apply. If a person sells an item for less than its full value or extends a loan without interest or at a reduced interest rate, this could be considered a gift for tax purposes. The donor is typically responsible for paying the gift tax. Each year, there is an annual exclusion amount for gifts to any one person that is not subject to the tax. Beyond this exclusion, the donor must file IRS Form 709 to report the gift. The lifetime gift tax exemption also applies, which allows individuals to give up to a certain amount over their lifetime before incurring a tax. It's important to consult with an attorney or tax advisor for specific advice and to ensure compliance with current tax laws and regulations.