Members of the Maryland Association of Certified Public Accountants are answering readers' tax questions through April 15.
Q: My question involves a gift of common stock to another person, not a relative. First, who pays the gift tax, the giver or the receiver? Second, how do you compute the amount of the gift value? Is it the amount I paid for the stock ($17,000) or the current value of the stock ($37,000)?
A: An individual may give up to $10,000 per year per donee tax free. Gifts in excess of $10,000 may result in a gift tax, which the donor pays. Generally, gift tax will not be payable pursuant to a gift in excess of $10,000 because taxable gifts can be applied to the lifetime unified credit equivalent of $600,000. An individual can transfer assets of up to $600,000 during his life before incurring gift-tax liability. See IRS Form 709 and Publication 499 for more information. Gifts are valued at the fair market value on the date the gift is made. But the donee's basis of the gifted property will equal the donor's. In this case, the donee's basis of the stock received will be $17,000.
Q: Can you tell me how to value a car donated to a charity?
A: You must determine the fair market value of the car by using guides called "blue books," which list average prices for most model cars. These also provide estimates for adjusting the price for unusual equipment, mileage and physical condition of the vehicle to arrive at the true value of the car. You can find the blue book in most public libraries.
The above advice is for general purposes only and is not intended as legal, accounting or tax advice. Specific situations may vary.
Members of the Maryland Association of Certified Public Accountants will answer tax questions from readers until April 15 and also offer a Tax Tip of the Week.
To submit a question, call Sundial, The Sun's telephone information service, at (410) 783-1800. In Anne Arundel County call 268-7736, in Harford County 836-5028, and in Carroll 848-0338. Using a touch-tone phone, enter 6225 after the greeting. Push 1 to submit a tax question; state the question in full. Push 2 to hear the tax tip. Selected questions will be answered in the Business section. No questions will be answered by phone.