Gift tax

A tax on transfers made during life. Where it is charged only on the amount given, the money paying it is not itself taxed, which can make giving now cheaper than leaving the same sum at death.

Where you will meet it

Gift tax appears in 2 learning outcomes on the CFA syllabus. A few of them:

• Set out why private businesses are valued and what financial analysts should concentrate on
  CFA Level II · Equities

  “Compliance-related valuations meet financial reporting requirements, such as goodwill impairment tests, and tax requirements, such as estate and gift tax.”

• Explain and propose planning for passing wealth to others by lifetime gifts
  CFA Level III · Private Wealth Pathway

  “The case strengthens when high-growth assets are given early, when any gift tax falls only on the amount given (whereas an estate tax also taxes the money used to pay it), and when the recipient's tax rate is lower.”

Practise it

• Today's practice question One question, with every wrong option explained.
• Free Level I diagnostic test Twelve questions that show which topics to start with.
• Free finance calculators Check your arithmetic on the exam's core formulas.

All terms beginning with G · Glossary