Hypothetical Question

[erchess]

Harlan,

in your view what is the tax consequence of whether the engagement ring is a conditional or an unconditional gift?

Anyone, do you happen to know how much of a gift one could give in 1957 without triggering gift tax?

[ChEAr$]

My opinion

in your view what is the tax consequence of whether the engagement ring is a conditional or an unconditional gift?

Anyone, do you happen to know how much of a gift one could give in 1957 without triggering gift tax?

will probably never be sought by our Supreme Court, but if they asked, I would go with
the unconditional approach. My daddy always told me, "never spend any more than you
can do without." Or words to that effect. And momma always told me, that life is like a
box of .... hmmm...[deleted]

As for your second question, it was between 2.25% and 57.75%, with an annual exclusion of 3,000 and exemption amount of 30,000.

[Bees Knees]

But that is if the marriage took place. What if the marriage never happened? No "partnership" ever came to be.

To a certain extent, my previous partnership answer was tongue in cheek as the thread seemed to go into a quasi humorous theoretical tax debate.

A marriage is a partnership…but not under the tax code.

Normal gift tax rules apply. If you give someone an engagement ring, and under local law the gift is unconditional, gift tax rules apply, regardless of whether or not the marriage took place. Divorce rules, and unlimited gifting between spouses does not come into play until after the knot has been tied.

Moral is, never give an engagement ring with a FMV that exceeds the annual gift tax exclusion.

[jainen]

use gift splitting

>>never give an engagement ring with a FMV that exceeds the annual gift tax exclusion<<

Unless, of course, you use gift splitting with your current wife.

[Corduroy Frog]

Marriage Expert

No income or deduction. Take it from a marriage expert.

I've been married 29 years (if you added up all my spouses)...

[JohnH]

You might appreciate the humor

Lewis Grizzard, a humorist & columnist for the Atlanta Journal until his death a few years ago, commenting on marriage after having been married 3 (or more) times.

"Instead of getting married again, I'll just find a woman I don't like & give her a house."

[LTS]

more humor (?) from long ago

rip taylor - the light hearted fellow with a rug and confetti in his act - commented that his love life in las vegas was based on a rent not own policy.

[Bees Knees]

A follow up on engagement rings…I was watching The People’s Court last night, and the judge said that most states now have No Fault laws concerning engagement rings, meaning, if the couple decides not to get married, the engagement ring belongs to the one who gave it to the fiancée. She said engagement rings are generally considered conditional upon the couple getting married. If there is no marriage, then state law usually says you have to give it back.

Conditional gifts are not subject to gift tax. No gift tax return would be required in such a state. If she is required to give the ring back in a no fault state, but refuses to do so, he can sue to get the ring back. If he chooses not to sue and just lets her keep the ring, then it would become an unconditional gift and a gift tax return would be required.

[WhiteOleander]

Very good analysis Bees.

I guess I better add a question to my interview sheet.

"Did you give an engagement ring to anyone this year?" ;>)