This detailed article addresses the primary aspects of gift tax valuation and highlights its key role in federal transfer tax reporting.

A good grasp of gift tax valuation is a must for taxpayers gifting substantial assets, in order to be in compliance with law. The Internal Revenue Service mandates that the gifted property must be valued at the fair market value on the gift date and reported accordingly. This value is what the asset would typically fetch in the market between a willing buyer and a willing seller. High-value or less liquid assets, such as shares in a family-owned business or real estate, require the assistance of a qualified appraiser to determine the gift value accurately. Proper record keeping not only supports the taxpayer's case during any audit but also helps in saving penalties and resolving any conflicts over lifetime gift tax exemptions.