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Is an engagement ring subject to gift tax?
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Rodney Farber
Feb 2, 2016, 5:42:04 PM2/2/16
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The bazillion dollar engagement ring given to Mariah Carey got me to wondering if there would be tax on the gift. One argument is that they are not married so there is no spousal exclusion and the gift is taxable. Another is that the gift is contingent upon marriage, so title to the ring does not pass until after they are married and the spousal exclusion is in effect.
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Stuart Bronstein
Feb 2, 2016, 5:57:12 PM2/2/16
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Rodney Farber <rodney...@gmail.com> wrote:
> The bazillion dollar engagement ring given to Mariah Carey got me
> to wondering if there would be tax on the gift. One argument is
> that they are not married so there is no spousal exclusion and the
> gift is taxable. Another is that the gift is contingent upon
> marriage, so title to the ring does not pass until after they are
> married and the spousal exclusion is in effect.
It depends. In some states an engagement ring is considered
> The bazillion dollar engagement ring given to Mariah Carey got me
> to wondering if there would be tax on the gift. One argument is
> that they are not married so there is no spousal exclusion and the
> gift is taxable. Another is that the gift is contingent upon
> marriage, so title to the ring does not pass until after they are
> married and the spousal exclusion is in effect.
contingent, and if the marriage doesn't take place it must be given
back. In other states the gift is considered complete, and need not
be returned if there is no marriage.
So as you say, if it's contingent the gift isn't complete until the
marriage ceremony takes place. And at that time the couple is
married so no return is required. But if the gift is complete at the
time the ring is given, then (assuming it's worth more than the
exemption amount) a gift tax return should be filed.
--
Stu
http://DownToEarthLawyer.com
tar...@google.com
Feb 4, 2016, 9:41:15 AM2/4/16
to
On Tuesday, February 2, 2016 at 2:57:12 PM UTC-8, Stuart Bronstein wrote:
> So as you say, if it's contingent the gift isn't complete until the
> marriage ceremony takes place. And at that time the couple is
> married so no return is required. But if the gift is complete at the
> time the ring is given, then (assuming it's worth more than the
> exemption amount) a gift tax return should be filed.
So what happens if the gift is complete at the time it is given and then the marriage occurs in the same tax year.
> So as you say, if it's contingent the gift isn't complete until the
> marriage ceremony takes place. And at that time the couple is
> married so no return is required. But if the gift is complete at the
> time the ring is given, then (assuming it's worth more than the
> exemption amount) a gift tax return should be filed.
If you get married by 12/31 in the year of the gift, do you get to use the unlimited spousal deduction for all gifts that year, including ones before the actual date of the marriage?
John Levine
Feb 4, 2016, 5:54:04 PM2/4/16
to
>So what happens if the gift is complete at the time it is given and then the marriage occurs in the same tax year.
>
>If you get married by 12/31 in the year of the gift, do you get to use the unlimited spousal deduction for
>all gifts that year, including ones before the actual date of the marriage?
As far as the IRS is concerned, if you're married on Dec 31, you were
>
>If you get married by 12/31 in the year of the gift, do you get to use the unlimited spousal deduction for
>all gifts that year, including ones before the actual date of the marriage?
married the whole year. Guess what my wedding anniversary is.
https://www.irs.gov/publications/p17/ch02.html#en_US_2015_publink1000170736
Alan
Feb 9, 2016, 6:30:04 PM2/9/16
to
On 2/8/16 8:41 PM, D. Stussy wrote:
> "John Levine" wrote in message news:n90kok$1blg$1...@miucha.iecc.com...
>
> CAREFUL: Agreed that is the general rule for filing status, but what if
> they got married in December, went on the honeymoon returning January --
> such that they never cohabitated during [the last 6 months of] the
> year? If [at least] one of them has a dependent child from a former
> marriage, that spouse [or both] could qualify for HoH filing status
> instead. 26 U.S.C. 7703 makes that clear for ALL purposes (including
> gift tax), not just filing status. Therefore, one needs to make certain
> that the donor is still considered married even if the recipient is not
> under this rule.
I don't think 7703 applies here. It is 7703(b) that contains the
language for Head of Household and it says:
"(b) Certain married individuals living apart
For purposes of those provisions of this title which refer to this
subsection, if— ..."
The only section in Title 26 that I am aware of that points to 7703(b)
is code section 2(b) Definition of Head of Household. Therefore, I must
conclude that any other provision of the code not pointing to 7703(b)
uses the regular definition of who is married unless some other
provision has a different meaning.
>
> 26 U.S.C. 7701(a)(17) does specifically state that for gift tax purposes
> regarding division of property (section 2516), "husband" and "wife"
> relationships remain in place AFTER a divorce, but says nothing about
> the period before in the year of marriage.
> "John Levine" wrote in message news:n90kok$1blg$1...@miucha.iecc.com...
>> So what happens if the gift is complete at the time it is given and
>> then the marriage occurs in the same tax year.
>>
>> If you get married by 12/31 in the year of the gift, do you get to use
>> the unlimited spousal deduction for
>> all gifts that year, including ones before the actual date of the
>> marriage?
>
> As far as the IRS is concerned, if you're married on Dec 31, you were
> married the whole year. Guess what my wedding anniversary is.
> =============
>> then the marriage occurs in the same tax year.
>>
>> If you get married by 12/31 in the year of the gift, do you get to use
>> the unlimited spousal deduction for
>> all gifts that year, including ones before the actual date of the
>> marriage?
>
> As far as the IRS is concerned, if you're married on Dec 31, you were
> married the whole year. Guess what my wedding anniversary is.
>
> CAREFUL: Agreed that is the general rule for filing status, but what if
> they got married in December, went on the honeymoon returning January --
> such that they never cohabitated during [the last 6 months of] the
> year? If [at least] one of them has a dependent child from a former
> marriage, that spouse [or both] could qualify for HoH filing status
> instead. 26 U.S.C. 7703 makes that clear for ALL purposes (including
> gift tax), not just filing status. Therefore, one needs to make certain
> that the donor is still considered married even if the recipient is not
> under this rule.
I don't think 7703 applies here. It is 7703(b) that contains the
language for Head of Household and it says:
"(b) Certain married individuals living apart
For purposes of those provisions of this title which refer to this
subsection, if— ..."
The only section in Title 26 that I am aware of that points to 7703(b)
is code section 2(b) Definition of Head of Household. Therefore, I must
conclude that any other provision of the code not pointing to 7703(b)
uses the regular definition of who is married unless some other
provision has a different meaning.
>
> 26 U.S.C. 7701(a)(17) does specifically state that for gift tax purposes
> regarding division of property (section 2516), "husband" and "wife"
> relationships remain in place AFTER a divorce, but says nothing about
> the period before in the year of marriage.
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