SUMMARY DATA

For the calendar year 1951, property valued at $999,518,000 was transferred as gifts by individuals who reported the transfers on 41,703 gift tax returns, Form 709. Among these returns there are 8,360 taxable returns showing total gifts of $516,226,000, exclusions of $67,400,000, and net gifts of $304,131,000 resulting in a gift tax liability of $67,426,000. The 33,343 nontaxable returns show total gifts of $483,292,000, exclusions of $190,770,000, together with deductions for charitable gifts, marital deductions, and specific exemption which equal the amount of total gifts after exclusions.

Gifts amounting to $214,414,000 on returns of husbands and wives are transferred from the taxpayer's return to the return of the taxpayer's spouse under provisions that allow husband and wife to divide equally between them gifts made to third parties, if they signify their mutual consent.

The value of gifts made to donees, each of whom was the donor's spouse at the time of the gift, amounts to $74,871,000; and the allowable deduction pertaining thereto is $36,852,000.

GIFT TAX RETURNS INCLUDED

Gift tax returns included in this report are returns, Form 709, filed by individuals who, during the calendar year 1951, transferred property by gift. Tentative returns are not used and amended returns are used only if the original returns are excluded. A gift tax return is required of every individual, citizen or resident, who during the calendar year made gifts (or who is considered as having made gifts) to any one donee of more than $3,000 in value or made gifts of future interests in property regardless of the value. Similarly, a nonresident alien is required to file a gift tax return if gifts consist of property situated in the United States. A gift tax return is required even though because of authorized deductions a tax may not be due. The return is due on or before the 15th day of March, following the close of the calendar year in which the gift is made, and cannot be filed prior to the close of the calendar year unless the return is for a deceased donor.

Data are taken from each return as reported by the donor and, therefore, do not reflect any revisions that may be made as a result of official audit, such as revaluations, disallowed deduction, refund of tax, or additional assessments.

GIFT TAX PROVISIONS FOR 1951

The gift tax on the transfer of property by gift is imposed by chapter 4 of the Internal Revenue Code

of 1939. The gift tax is not imposed upon the property but subjects to tax the transfers of property by gift and extends to the sales and exchanges of property for less than an adequate and full consideration in money or money's worth. The gift tax is imposed whether the transfer is in trust or otherwise, whether the gift is direct or indirect or of future interests in property, and whether the property so transferred is real or personal, tangible or intangible. The gift tax, primary and personal liability of the individual making the gift, is an excise upon his act of making the transfer and is measured by the value of properties passing from the donor to the donee or donees during the calendar year, regardless of the fact that the identity of any donee may not be known or ascertainable.

Every donor must report in his total gifts the entire value of gifts totaling more than $3,000 made to any one donee during the calendar year, even though the first $3,000 of such gifts are eliminated for the purpose of computing the gift tax liability. All gifts of future interests in property, however small, must be reported in total gifts and no exclusion is allowed for such gifts in computing the gift tax. Gifts totaling $3,000 or less to any one donee, other than gifts of future interests, generally need not be reported; however, under the provisions of the Code allowing husband and wife to divide equally between them gifts made to third parties, these small gifts must be reported when made to any third party to whom either spouse is considered, after the division, to have made gifts exceeding $3,000 in value.

Husband and wife, if they are citizens or residents, may by signifying their mutual consent consider gifts to third persons as made one-half by each. The spouse making the gift must include the entire value of the gift in his total gifts, schedule A of the return, provision being made on the return form for the transfer of one-half of such gifts to the other spouse who then must report this half on his or her separate gift tax return.

Community property gifts are reported in either of two ways. The entire value of the community property gift may be reported by one spouse in his total gifts (schedule A); or each spouse may report on separate returns, in his total gifts (schedule A), the undivided one-half interest in the community property gift. If there is a consent to divide between husband and wife gifts made to third parties, the division is carried out as provided on the return form, regardless of the method used for reporting community property gifts.

Exclusions from total gifts are allowed for purposes of computing net gifts and gift tax. Except in the case of gifts of future interests, an exclusion is allowed for the first $3,000 of gifts made to every donee including donees represented by gifts picked up from the return of a spouse on account of the consent to divide between

husband and wife gifts made to third parties. The amount of exclusion is deducted from total gifts after the adjustments resulting from the division of gifts between husband and wife.

Deductions are allowed for charitable gifts, gift to spouse (the so-called marital deduction), and specific exemption.

The gift tax rates are 24 percent of the first $5,000 of net gifts, increasing on a graduated scale to 5734 percent on net gifts in excess of $10,000,000. Gift tax for the current year, a liability of the donor, is the excess of a tax computed at these rates on the aggregate net gifts made subsequent to June 6, 1932, over a tax computed at the same rates on the aggregate net gifts exclusive of the current year net gifts. This tax method results in gifts of the current year being taxed at the same rate as applied to gifts of the most recent year or at a higher rate in the progressive rate scale, regardless of the amount of gifts for the current year. Owing to the graduated tax rates and to the variations in the amounts of exclusions, deductions, and specific exemption taken, and in the amount of aggregate net gifts since June 6, 1932, donors making gifts of equal amounts in the current year may have different tax liabilities or one may have a tax liability and the other no tax liability.

A résumé of the requirements for filing, exclusions, specific exemption, and tax rates for 1944-51 is presented in tables E and F, page 158.

BASIC ITEMS

Total gifts include the entire value of all gifts reported by the donor. The amount of total gifts tabulated includes all gifts of future interests, however small, and gifts other than future interests totaling $3,000 or less to any one donee when reported by the donor, whether or not such gifts are required to be reported. Generally, gifts amounting to $3,000 or less (other than future interests) need not be reported; however, on returns of husband and wife who consent to divide between them gifts made to third parties, these small gifts are required if, after the division, either spouse is considered as having made gifts exceeding $3,000 in value to any one donee.

Gifts of taxpayer reported by spouse mean that portion of the donor's total gifts which are reported by the donor's spouse on a separate gift tax return. If husband and wife consent, all gifts made to third parties may, for the purpose of gift tax, be considered as made one-half by each. The return form provides that this portion be subtracted from the taxpayer's total gifts.

Gifts of spouse reported by taxpayer mean the amount of total gifts picked up from the return of the taxpayer's spouse on account of the mutual consent of husband and wife to consider gifts made to third parties as made one-half by each spouse. Provision is made on the return form for the taxpayer to include this transferred amount in his total gifts before exclusions

Total gifts before exclusions are the same as total gifts in the case of single persons and of spouses who do not consent to divide between them gifts made to third parties. In the case of married donors who consent to consider gifts as made one-half by each spouse, total gifts before exclusions are the amount of gifts after the adjustments for the transfers between husband and wife; that is, total gifts of the taxpayer reduced by the portion which his (or her) spouse reports on a separate return, after which the taxpayer's gifts are increased by the amount of gifts picked up from the return of his (or her) spouse.

Exclusions are allowed in determining the amount of net gifts for the year. Donors are allowed an exclusion the first $3,000 of gifts, except gifts of future interests, made to any one donee. When gifts made to third parties are divided between husband and wife, each spouse is entitled to an exclusion for every donee represented in his (or her) total gifts before exclusions (that is, after transfers between them); thus each spouse is allowed an exclusion against his half of the gift to a common donee. An exclusion may be less than $3,000; it does not exceed the value of gifts included in total gifts before exclusions.

Total gifts after exclusions are the total included amount of gifts for the year. This amount, which is after the adjustments for division of gifts between spouses and after the allowable exclusions, is the taxpayer's total gifts for the year from which the allowable deductions are to be taken for determination of net gifts.

Deduction for charitable, public, and similar gifts is the value, after exclusions, of gifts made to or for the use of the United States, any State, Territory, or subdivision thereof, for exclusively public purposes, or made to or for the use of organizations, trusts, community chests, funds, or foundations organized and operated exclusively for religious, charitable, scientific, literary, or educational purposes. This deduction is allowed nonresident aliens for such gifts used within the United States only.

Marital deduction, allowed citizens and residents, is an amount equal to one-half the value of property interests which qualify for this deduction and were transferred by gift to a donee who at the time of the gift was the donor's spouse, but the deduction cannot exceed the value of such gifts remaining after the exclusion pertaining thereto.

Specific exemption of $30,000 is allowed each citizen and resident donor and may be taken in its entirety in a single year or spread over a period of years at the option of the donor. When the aggregate of $30,000 has been taken, no further exemption is allowable. The amount of specific exemption taken in the current year is that claimed by donors who have not previously used all of their exemption.

Net gifts for the year are the net gifts subject to tax,

charitable gifts, marital deduction, and specific exemption. Only taxable returns have net gifts; nontaxable returns show deductions equal to total gifts after exclusions.

Gift tax is the tax liability on net gifts for the current year, computed as prescribed on the return and reported by the taxpayer.

Prior years, in reference to gift tax tabulations, apply to the interval of years between the inception of the present period of gift taxation, June 6, 1932, and the beginning of the current year.

Net gifts for prior years are the aggregate net gifts transferred since June 6, 1932, exclusive of the current year gifts. The amount of net gifts for prior years is reported by the donor in schedule B on the current return, for the purpose of computing the gift tax liability for the current year. The amount reported in this schedule may exceed the actual net gifts for those years, for the reason that, if more than $30,000 specific exemption was taken before 1943 when a larger exemption was allowable, the net gifts for prior years are increased by an amount equal to the excess.

Gift tax for prior years is a tax computed on the aggregate net gifts for prior years, as a part of the current year tax computation. This tax may not be the actual tax reported for those years because it is computed at current year rates on the aggregate net gifts for prior years adjusted to include an amount equal to the specific exemption in excess of $30,000 taken before 1943.

CLASSIFICATION OF GIFT TAX RETURNS

Gift tax returns are classified as taxable and nontaxable. Taxable returns are further classified by size of net gifts. Both taxable and nontaxable returns are distributed by size of total gift plus gift tax. Identical donors are distinguished from other donors; and taxable returns of identical donors which show a tax on gifts for prior years are classified by size of the aggregate net gifts for prior years. Data are tabulated by these classifications in the gift tax tables, but not all items are available for every classification.

Taxable and nontaxable returns.-Gift tax returns are classified as taxable and nontaxable for the current year, based on the existence or nonexistence of gift tax liability for 1951. Tax status for prior years is determined from the tax (or no tax) on aggregate net gifts for prior years, reported by the donor for the purpose of computing the current year gift tax.

Net gift classes.-Gift tax returns with net gifts are segregated into net gift classes based on the amount of net gifts for the current year. Only taxable returns show net gifts. Nontaxable returns have no net gifts and are designated "No net gifts."

segregated into total gift plus gift tax classes based on the sum of total gifts before exclusions and the gift tax for the current year. Nontaxable returns have no gift tax but are distributed under this classification on the basis of total gifts before exclusions.

Identical donors.-Identical donor is a term used to indicate an individual who made gifts to donees other than charitable, public, and similar organizations both in the current year and in prior years. Identical donors are identified from data on the current year returns. Schedule B shows the net gifts for, and specific exemption taken in, prior years. From these data, it can be determined whether the prior year gifts were made to donees other than charitable organizations. If husband and wife consent to divide gifts between them, each is considered a donor of his (or her) respective total gifts before exclusions, the amount of which includes gifts transferred from the return of the other spouse as a result of mutual consent.

Net gift for prior years classes.-Gift tax returns of identical donors that show a tax for 1951 and also a tax on net gifts for prior years are segregated into net gift for prior years classes based on the amount of aggregate net gifts for prior years as adjusted in schedule B on the current return to include the amount in excess of $30,000 specific exemption taken before 1943.

TABULATED DATA

Data for the gift tax returns for 1951 are presented in 4 gift tax tables. Tables 1 and 2 include all gift tax returns and taxable and nontaxable returns are tabulated separately. In the first table, data are distributed by net gift classes and gifts are shown by types of property transferred. Stocks and bonds comprise more than one-half of all gifts. In the second table, total gifts, exclusions, deductions, net gifts, and tax are tabulated by total gift plus gift tax classes. The significance of this classification lies in the fact that the basis is more nearly comparable with that used for classification of estate tax data, the latter being classified on values before the payment of tax.

Tables 3 and 4 pertain to gift tax returns of identical donors. Table 3 shows the amount of total gifts after exclusions, deductions, net gifts, and tax for all identical donors, tabulated by taxable status for the current year in combination with the taxable status for prior years. In table 4, there is a frequency distribution of identical donors who are taxable for 1951 and also report taxable gifts for prior years, by net gift classes cross classified by size of net gifts for prior years. A historical summary of number of returns, total gifts by types, and gift tax for 1944-51 is presented in table 5.

Throughout the tables, values in thousand dollars are