So far in our 2007 year-end tax planning series, we've talked about things you have to do for year end. We haven't really talked that much about exactly how you get some things done.
One area where getting something done by year-end is critical is the gift tax area. If you fail to use your $12,000 per-donor, per-donee annual exclusion for 2007, it is lost forever. That means you have to make sure you complete your annual exclusion gifts before the clock strikes 12:00 January 1.
The check has to clear to complete the gift. If you write a check for a $12,000 gift on December 31, 2007, but the recipient doesn't cash it until January 2008, it is a 2008 gift. The IRS says a check isn't a completed gift until it is cashed.
So if you want to give somebody a check as your year-end gift, you'll want to give them a cashier's check before year-end. The tax law calls that a completed gift because there you can't stop payment on a cashier's check.
The items included in the Tax Update Blog are informational only and are not meant as tax advice. Consult with your tax advisor to determine how any item applies to your situation.
Joe Kristan writes the Tax Update items, and any opinions expressed or implied are not necessarily shared by anyone else at Roth & Company, P.C. Address questions or comments on Tax Updates to