Taxation on Gifts & Inheritance
Receiving a gift or inheritance from any source, besides an employer, in any amount will not incur taxes. However, if the gift is capital property, say investments or real estate that is not considered a principal residence, then person who gives the gift will be believed to have “sold” the property at fair market value and will have to pay taxes on any resulting capital gain.
If an employer gives the gift then it is likely considered a taxable benefit to the employee. Gifts include, cash, near-cash, and non-cash. Cash and near-cash (gift cards, securities, stocks) are always taxable while non-cash gifts are not taxable if costs do not exceed $500 annually, any amount over that must be included in the employee’s income and are subject to taxation. This amount excludes trivial items such as trophies, plaques, mugs, etc.
The above information is of a general nature only and should not be relied upon for specific situations. Click here for additional tax accounting services information. Call Marlies Y Hendricks CPA at 416-766-3941 to discuss your tax case in the event of a tax audit and to set up an appointment if you'd like professional help to represent you.