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 individuals in North Carolina as it is across the United States. It is imposed on the transfer of property by one person to another while receiving nothing, or less than the property's full value, in return. This tax is relevant regardless of the donor's intention for the transfer to be a gift. The tax encompasses all types of property transfers, including money, real estate, and other tangible or intangible assets. When a person sells something for less than its fair market value or extends a loan without interest or at a reduced interest rate, it may also be considered a gift for tax purposes. The donor is typically responsible for paying the gift tax and must file IRS Form 709 if the gift exceeds the annual exclusion limit. For 2023, the annual gift tax exclusion is $17,000 per recipient. Gifts that exceed this amount may require the filing of Form 709 and could potentially be taxable, although there are lifetime exemptions and other exclusions that may apply. It's important for individuals in North Carolina to consult with an attorney or a tax advisor to understand their specific obligations under federal gift tax laws.