I Need to File a Gift Return with the I.R.S.

Gifts of shares in privately-held companies or of the company itself must be reported at their fair market value. Such gifts may consist of shares in operating companies or family limited partnerships (holding companies of often real estate and/or marketable securities).

The giftor reports the amount of tax payable by attaching a Qualified Appraisal of the gift to the tax return. Gift returns are the target of some of the most frequent and expensive challenges by the Internal Revenue Service.  Such challenges are time-consuming, expensive, aggravating, and typically place the burden of proof upon the taxpayer.

The Pension Protection Act (2006) imposes severe penalties for the misreporting of gift taxes both on the taxpayer and the appraiser.

You may expect your tax reporting experience will be painless if the appraisal meets the following conditions:

  1. Credible – an appraisal that is robust, detailed and independent stands the best chance of being received as credible by the IRS, thereby minimizing the risk of a challenge;
  2. Qualified – a “qualified appraisal” that is prepared by a “qualified appraiser” according to professional valuation standards, such as the Uniform Standards of Professional Appraisal Practice, or USPAP.
  3. Timely – an appraisal that is delivered quickly gives you the opportunity to thoroughly review its contents and allows you to move on to other priorities.

Clients and their financial and legal advisors rely upon Arpeggio Advisors in order to promptly and properly file their gift tax returns.

Would you like more information? Contact us for a free consultation or if you'd like more literature to review.

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