____ are valued at fair market value (FMV) on the date of transfer.

____ are valued at fair market value (FMV) on the date of transfer.

• A. Gifts
• B. Bequests
• C. Inheritances
• D. Trusts

Answer: (A)

Value for gift tax purposes is determined by the fair market value on the date the gift is made, because the transfer of ownership happens at that moment. This means the amount that counts for tax purposes is the FMV at the moment the donor parts with the property, not some later value. That’s why gifts are valued at FMV on the date of transfer. Bequests and inheritances aren’t measured this way; they’re typically valued at the decedent’s date of death for estate tax purposes, not at the moment the beneficiary receives them. Trusts involve different timing rules depending on whether you’re funding the trust (which can resemble a gift at the funding date) or distributing assets from a trust (valued at the time of distribution). But the standard rule described points to gifts.

Value for gift tax purposes is determined by the fair market value on the date the gift is made, because the transfer of ownership happens at that moment. This means the amount that counts for tax purposes is the FMV at the moment the donor parts with the property, not some later value. That’s why gifts are valued at FMV on the date of transfer.

Bequests and inheritances aren’t measured this way; they’re typically valued at the decedent’s date of death for estate tax purposes, not at the moment the beneficiary receives them. Trusts involve different timing rules depending on whether you’re funding the trust (which can resemble a gift at the funding date) or distributing assets from a trust (valued at the time of distribution). But the standard rule described points to gifts.