“I received a five-figure gift from a relative this year. Is that taxable?”

No, gifts are not taxable to the recipient. Gifts are, however, reportable by the individual gifting. Reporting is required when someone gives over $15,000 in a calendar year to any one individual. Report is made on IRS Form 709, which represents a filing completely separate from an individual income tax return for the individual making a gift.

Here’s when the gift is taxable to the recipient: when the gift produces income. For example, each of these can be a gift: publicly traded stock, a local business interest, or a vacation home in the Rockies. After the gift date, this property often produces income, like dividends or gain on sale. The recipient, then, has a reporting requirement.

Now you know the ribbons attached to the gift you receive from Granny!

With over 20 years of experience in public accounting, Amanda Bechen CPA owns Bechen & Company PC located in Wagner, SD, and can be contacted at 605-384-4200 or www.bechenco.com.