Tyrrant wrote:
Co-worker of mine won an Ipad at work the other day, He didn't know you have to pay tax on it, part time employee paying 40% tax on a $600 device is funny.
Gift taxes are imposed on the donor, not the receiver. If the company told the employee they needed to pay that tax, it would constitute fraud, unless the receiver voluntarily agreed to pay the tax, in lieu of the other party, in which case it can't be soaked by the annual exclusion limit. (since otherwise it would be such an easy way to do hilarious amounts of tax chicanery.)
IIRC, the donor org can't hinge the receipt of the gift on agreeing to pay the tax, but I'm not 100% on that.
Edited, Dec 17th 2011 7:34am by Timelordwho