In what case does the IRS make the person who receives the gift pay taxes on it?

Answer 1

When the IRS determine that it was not a genuine gift from one individual taxpayer to another individual taxpayer.

For tax year 2009 or 2010 one family member can gift to any other number of family members up to $13,000 each without any reporting by either party each year.

The person who receives your gift does not have to report the gift to the IRS or pay gift or income tax on its value.

However, what you call a gift and what the IRS defines as one may be different. And many things the world calls a gift are very much taxable indeed.

For example, remember when Oprah gave everyone in the audience a gift of a car? And then the INCOME TAX on the value of that gift was indeed due by the one getting it? (As is tax on winning any game show or lottery, etc) In fact, the money that Oprah then said she would give each to pay the tax (it was something like car worth 30K, tax then @10K, (of course in reality different for every person), that 10K to pay the tax is INCOME TOO! It too needs to have tax (in this case all things remaining the same - 3K more) tax paid on it. And the other 3K...well it too is a gift of value...and taxable.

The same is true in most all situations (outside of family) - call it what you want that doesn't change it (bonus, gift, holiday extra, performance, good looks, etc- whatever - it's income) - if you are given ANYTHING of value the value you have been given is taxable. PERIOD