The National Retail Federation recently reported that Valentine’s Day spending in the U.S. is expected to reach over $18 billion!

That’s seems like an awful lot of heart shaped boxes of chocolate but keep in mind that if you give a non-spouse a gift valued in excess of the annual exclusion amount, you could be subject to a gift tax.

For 2017 the annual federal gift tax exclusion amount for gifts to a non-spouse is still $14,000 per person, per year. If you are married, you and your spouse may each give up to $14,000, per person, per year.

Although there are no immediate tax concerns for the recipient of a gift because federal gift tax is imposed upon the donor, the recipient could be liable for capital gains tax in the future. Highly appreciated gifts such as real estate or stocks will render the recipient liable for capital gains tax when the gift is sold later.

For example, if you were given stock that the donor had purchased for $10 per share (which was also the donor’s basis) and you later sold it for $100 per share, you would pay tax on a gain of $90 per share.


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