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<<A gift tax question: A friend and his then-fiancee bought a house (in California) in the spring of 1998. My friend supplied the entire $30,000 down payment, and they took title as joint tenants. The wedding went forward as planned about seven weeks later. Should my friend have reported half of the down payment as a gift to the woman who is now his wife?>>

I believe so, yes. If your friend would have simply taken the house as his separate property originally and then "gifted" half of it to his new spouse AFTER the wedding, there would be no gift tax consequences (since gifts between spouses are unlimited and ignored for gift tax purposes).

But the gift is determined on the date of the gift. It's immaterial that the gift and the marriage took place in the same calendar year.

Roy is right --- whether there is a gift or not is determined at the moment the transfer occurs. But, let me pose a hypothetical, in the nature of a defense to an IRS claim for the tax:

What would have happened if, during the 7 weeks between the transfer and the intended wedding, the couple had called off the wedding and decided to go their separate ways? Would she have had to give him back her half of the house? You law students out there --- what about those engagement ring cases?
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