Gift Tax - If I return the gift to the donor within the same tax year, does the donor need to pay gift tax?

[Curious_panda1]

If donor A gave me 60k (above gift exemption) and later in the year I return the 60k to the donor,  do donor A need to pay gift tax? or worst I would have to pay gift tax too since IRS consider both transaction separately. 

My question is, does IRA look at net gift amount or per transaction when considering gift tax?

[tagteam]

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@Curious_panda1 wrote:

My question is, does IRA look at net gift amount or per transaction when considering gift tax?

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It is per donee from the same donor. In other words, as a donor you can give any number of persons up to the annual exclusion amount ($18,000 for 2024) without being required to file a gift tax return (709).

[tagteam]

Also, the two transactions will most likely be treated as separate completed gifts despite the fact that they were made in the same tax year.

A completed gift merely requires donative intent, delivery, and acceptance. 

There will be no tax due unless, in the unlikely event, you have exceeded the lifetime exemption (currently over $13 million).

The alternative here would be to argue that the initial transfer was in the nature of a mistake and the return was done to rectify that mistake.

[Curious_panda1]

>There will be no tax due unless, in the unlikely event, you have exceeded the lifetime exemption (currently over $13 million).

Can you elaborate? I was under the impression if a donor gave a donee more than the annual exempt amount (18000 for 2024) then tax would be owed?

[tagteam]

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@Curious_panda1 wrote:

Can you elaborate? I was under the impression if a donor gave a donee more than the annual exempt amount (18000 for 2024) then tax would be owed?

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Not unless the lifetime exemption has been exceeded.

See https://www.irs.gov/instructions/i709#en_US_2023_publink16784xd0e5332

Note that the information at the link above is for the 2023 tax year.