[dragonwriter]

> Maybe this isn't the right place to ask, but could someone explain the rationale for taxing gifts within a family?

Could you explain the rationale for excluding such unearned income, other than privileging generational wealth against wealth earned by personal work and investment?

> Ignoring the possibility of using it to circumvent an income tax, etc., my initial thought is that if my dad wants to give me $30,001 this year, or even $300,000 this year, that he's already paid taxes on it and it's not the government's business.

He's paid tax on his income. When it goes to you, you are the then receiving income—whether it's as a gift or a payment for goods or services, whether you are in the family or not.

Favoring one of those situations over another is just that, favoritism; it's not justifiable by “already paid” logic in one case but not the others.

[isostatic]

> Could you explain the rationale for excluding such unearned income, other than privileging generational wealth against wealth earned by personal work and investment?

If I buy a round of drinks, do people have to pay tax?

(I assume there's some minimum threshold)

[mmcconnell1618]

I'm fairly certain the United States Internal Revenue Service would consider the drinks received by others as income they should technically report on their taxes. For practical purposes, I suspect that almost no one ever does report this type of gift, but yes, technically it would qualify.

If I give someone $5 for their birthday, they should report it but won't. If I give them $50,000 for their birthday, they better report it or risk the IRS finding out and coming after them.

[JoeAltmaier]

Gifts < $14K not necessary to report

[dragonwriter]

> If I buy a round of drinks, do people have to pay tax?

Ideally, probably, but even in a system which tries to mitigate the advantage of generational wealth created by the current favorable regime of gift and inheritance tax by a purer income tax, the friction of taxing de minimis personal gifts as income to recipients is something you probably want to avoid.

[vvillena]

They don't, because you do. That's sales tax at work.

Taxes are usually paid each time money moves hands.

[TheCoelacanth]

If you bought a round of Dalmore 62, then yes, otherwise, no because only gifts of more than $15k per year per person incur the gift tax (and technically, you would pay the tax, because the tax is on the giver and not on the recipient).