Legal Definitions - taxable gift

A taxable gift is a gift that is subject to taxation by the government. This means that if you give someone a gift that exceeds a certain amount, you may have to pay taxes on it.

For example, if you give your friend $20,000 as a gift, that amount may be subject to gift tax. The government sets a limit on how much you can give someone each year without incurring gift tax. In 2021, that limit is $15,000 per person. So, if you give someone more than $15,000 in a year, you may have to pay gift tax on the excess amount.

A taxable termination is a type of event that can trigger the generation-skipping transfer tax. This tax is imposed on certain transfers of property that skip a generation, such as gifts or bequests to grandchildren.

For example, let's say that your grandfather created a trust for your benefit. The trust pays you income for life, and then passes to your children when you die. When your father (who is not a skip person) dies, his interest in the trust terminates, and the trust property passes to you. This is a taxable termination, because the property is passing to a skip person (your children) without any intervening interests held by nonskip persons.