The federal gift tax is a tax on the transfer of property from one individual (the donor) to another (the donee) when the donor receives nothing—or less than full value—in return. The tax applies whether the donor intends the transfer to be a gift or not.

The gift tax applies to the transfer of a gift of any type of property. You make a gift if you give property (including money) or the use of or income from property without expecting to receive something of at least equal value in return. If you sell something at less than its full value or if you make an interest-free or reduced-interest loan, you may be making a gift.

For additional information, see Internal Revenue Service (IRS) Form 709 and its instructions.

The federal gift tax is applicable to any transfer of property where the donor does not receive full value in return, and it is enforced regardless of the donor's intent for the transfer to be a gift. This includes money, property, or the use of property. If an item is sold below its market value or a loan is given with no or low interest, it may also be considered a gift for tax purposes. In Colorado, as in all states, the federal gift tax rules apply because they are governed by federal law, not state law. Taxpayers in Colorado must adhere to the IRS regulations regarding gift taxes. The IRS Form 709 is used to report such transfers and calculate any tax owed. It's important to note that there are annual exclusions and lifetime exemptions to the gift tax, which allow individuals to give gifts up to a certain amount without incurring tax liabilities. For the most current exclusion and exemption amounts and detailed instructions, taxpayers should refer to the latest IRS Form 709 and its instructions.