Quick answer
Before making a large gift, the main issues to verify are: (1) whether it exceeds the annual exclusion and requires Form 709, (2) whether the recipient takes your carryover basis (for appreciated securities or real estate), (3) whether a qualified appraisal is required (non-cash, non-publicly-traded property), (4) whether direct payment to a school or medical provider avoids gift tax entirely, and (5) whether the recipient receives public benefits that could be affected. This tool surfaces the specific issues relevant to your gift inputs. It does not produce a tax calculation or legal recommendation.
Gift Structure Explorer
Making a large gift involves more than writing a check. Depending on what you give, who receives it, how much you've already gifted this year, and whether the recipient receives public benefits, there are different federal (and sometimes state) issues to verify. This tool maps your inputs to the issues most commonly encountered. It does not calculate your gift tax or tell you which structure to choose. consult a tax attorney or CPA before making large gifts.
Gift details
Additional factors
Issues to verify
Educational only. This is not a tax bill, legal advice, or a gift plan. Rules change; verify against current IRS publications and consult a CPA or tax attorney before making large gifts.
Key gift tax concepts
Annual exclusion and Form 709
The annual exclusion ($19,000 per recipient per donor in 2026) allows you to give that amount each year to any number of people without gift tax or filing requirements. Gifts above that amount (per recipient, per year) must be reported on Form 709. Reporting does not mean you owe tax. the excess reduces your lifetime exemption ($15 million in 2026) before any tax is owed. Gifts to spouses who are U.S. citizens are unlimited and not subject to gift tax (marital deduction).
Basis carryover: the cost of gifting appreciated assets
When you give appreciated property (stock purchased at $10,000, now worth $50,000), the recipient takes your original cost basis ($10,000). If they sell it, they owe capital gains tax on the $40,000 gain. If you had held the asset until death, the recipient would receive a stepped-up basis to fair market value, eliminating that embedded gain. For assets with large unrealized gains, the basis carryover effect should be weighed against the benefit of the gift before deciding to give the property directly.
Direct payment exception
Payments made directly to an educational institution for tuition, or directly to a medical care provider for qualifying medical expenses, are completely excluded from gift tax and do not count against the annual exclusion. These are separate from the annual exclusion. you can use both in the same year for the same person. The payment must be direct; reimbursement to the individual does not qualify.
Appraisal requirement for non-cash gifts
IRS regulations require a qualified appraisal for gifts of non-publicly-traded property over certain thresholds. A qualified appraisal must be conducted by a qualified appraiser meeting IRS standards, and must be obtained within a specific window before the filing date. Without a qualifying appraisal, the IRS may challenge the reported value. This applies to business interests, real estate, artwork, and other non-cash property.
Frequently asked questions
When do you have to file Form 709?
Form 709 (U.S. Gift (and Generation-Skipping Transfer) Tax Return) is required when you make taxable gifts exceeding the annual exclusion ($19,000 per recipient in 2026) during the year, when you make gifts eligible for gift-splitting with a spouse, when you make certain transfers to skip persons (generation-skipping), or when you want to elect to use gift-splitting or specific valuation methods. The form is due on the same date as your federal income tax return (April 15), with extensions available to October 15. Filing Form 709 does not necessarily mean you owe gift tax; amounts over the annual exclusion reduce your lifetime exemption ($15 million in 2026) before tax is owed.
What is basis carryover on gifted property?
When you give appreciated property (stocks, real estate) as a gift during your lifetime, the recipient generally takes your cost basis (carryover basis), not the fair market value at the time of the gift. If the recipient later sells the property, they may owe capital gains tax on the appreciation from your original purchase price. This contrasts with inherited property, which generally receives a stepped-up basis to fair market value at the date of death.
When is an appraisal required for a gift?
A qualified appraisal is generally required for gifts of non-publicly-traded property (business interests, real estate, artwork, collectibles) if the value exceeds a threshold that requires Form 709 reporting. The appraisal must meet IRS standards for qualified appraisals and qualified appraisers. Without a qualifying appraisal, the IRS may challenge the reported value, potentially resulting in gift tax liability or penalties.
What is the direct payment exception to gift tax?
Payments made directly to an educational institution for tuition, or directly to a medical care provider for someone else's qualifying medical expenses, are excluded from gift tax entirely and do not count against the annual exclusion. These payments must be made directly to the institution or provider, not reimbursed to the individual. Room and board, books, and other education costs do not qualify for this exclusion; only direct tuition payments do.