Under the tax code, the general rules applicable to income tax returns apply to annual gift tax returns. That is, a 3-year statute of limitations applies to the initiation of an audit based on the value of the gift. The IRS has issued regulations describing its requirements to ensure the protection of the statute of limitations for gift purposes.
Under current law, the IRS can challenge valuation or appraisal information on gift tax returns many years after the expiration of the statute of limitations under certain cases based mainly on fraud. The IRS may challenge the listed gift value on the initial return. Our recommendation at this time is that all records, such as valuation reports, bank records, and any other items substantiating a gift tax return be kept until the donor’s estate tax return is settled.
To discuss your NJ estate administration and probate matter, please contact Fredrick P. Niemann, Esq. toll-free at (855) 376-5291 or email him at firstname.lastname@example.org. Please ask us about our video conferencing or telephone consultations if you are unable to come to our office.
By Fredrick P. Niemann, Esq. of Hanlon Niemann & Wright, a Freehold Township, Monmouth County, NJ Estate Administration and Probate Attorney