"In the fwiw department, the IRS says you can send anyone a gift up to $11,000, and not be taxable."
"Foolish statement. It won't be taxable towards the GIVER'S estate tax credit, but it WILL be taxable towards the recipient."
Your response doesn't seem correct. A few years ago my grandmother was sick and trying to get her estate under 475,000.00 for tax reasons. She gifted 10,000.00 each to myself, my two siblings, my father, and my uncle. None of us had to pay taxes on the 10,000.00.
That said, I don't think this situation qualifies for the 11,000.00 gift tax exclusion.
http://www.irs.gov/businesses/small/article/0,,id=108139,00.html
Q: What is considered a gift?
Any transfer to an individual, either directly or indirectly, where full consideration (measured in money or money's worth) is not received in return.
Q: What can be excluded from gifts?
The general rule is that any gift is a taxable gift. However, there are many exceptions to this rule. Generally, the following gifts are not taxable gifts.
1. Gifts that are not more than the annual exclusion for the calendar year.
2. Tuition or medical expenses you pay for someone (the educational and medical exclusions).
3. Gifts to your spouse.
4. Gifts to a political organization for its use.
In addition to this, gifts to qualifying charities are deductible from the value of the gift(s) made.
Q: May I deduct gifts on my income tax return?
Making a gift or leaving your estate to your heirs does not ordinarily affect your federal income tax. You cannot deduct the value of gifts you make (other than gifts that are deductible charitable contributions). If you are not sure whether the gift tax or the estate tax applies to your situation, refer to Publication 950, Introduction to Estate and Gift Taxes.
Q: How many annual exclusions are available?
The annual exclusion applies to gifts to each donee. In other words, if you give each of your children $11,000 in 2002, 2003 or 2004, the annual exclusion applies to each gift.
Also, I am not an accountant.
When I got the 10,000.00 cashiers check from my grandmother, it had the word "GIFT" typed in the memo field. It was explained to me that "GIFT" had to be on the cashiers check for tax reasons.