This Special Notice has been modified and superseded in part by SN 93(14)
PURPOSE: This Special Notice describes, and is intended to provide general information to taxpayers about, the gift tax enacted by 1991 Conn. Pub. Acts 3, §§136 through 145, inclusive (June Spec. Sess.).
EFFECTIVE DATE: Effective upon issuance and applicable to gifts made on or after September 1, 1991.
STATUTORY AUTHORITY: 1991 Conn. Pub. Acts 3, §§136 through 145, inclusive (June Spec. Sess.).
TRANSFERS SUBJECT TO GIFT TAX: Transfers (in trust or otherwise) of property (real or personal, tangible or intangible) by gift (direct or indirect) by resident or nonresident individuals on or after September 1, 1991 are subject to the gift tax as follows:
All transfers by resident individuals are subject to the gift tax, other than transfers of real or tangible personal property having an actual situs outside Connecticut. In general, tangible personal property has a situs where it is permanently located and employed.
Transfers by nonresident individuals of real or personal property having an actual situs within Connecticut and of intangible personal property within Connecticut employed in carrying on a trade or business within Connecticut are subject to the gift tax. Examples of intangible personal property include corporate shares, a partnership interest, bonds, promissory notes, franchises, copyrights, patents, insurance policies and judgments.
The criteria used, for gift tax purposes, to determine who is a resident or nonresident individual are the same criteria used for Connecticut income tax purposes.
The amount by which the fair market value of the property, at the time of its transfer, exceeds the consideration is treated as a gift.
PERSON ON WHOM THE GIFT TAX IS IMPOSED: The gift tax is imposed on donors who are resident individuals or nonresident individuals; however, (1) a gift by a corporation will generally be treated as a gift by the stockholders of the corporation and (2) a gift to a corporation as a gift to the stockholders of the corporation. If the gift tax is not paid when due, the donee will be personally liable for the tax to the extent of the value of the gift.
TAXABLE GIFTS: Taxable gifts are the total amount of gifts less certain deductions.
The total amount of gifts is the sum of the value (as of the date of the gift) of each gift made by the donor to a donee during the calendar year. This amount may be less than the total amount of gifts, for federal gift tax purposes, to the extent that gifts made by the donor are not subject to the Connecticut gift tax (e.g., a gift of real property situated in New York).
Certain transfers are wholly or partially excluded from the total amount of gifts. The first $10,000 of gifts to any donee during the calendar year of a present (and not a future) interest in property is excluded. Thus, if the first $10,000 of gifts to any donee involved (1) tangible personal property having an actual situs outside Connecticut or (2) real property situated in Connecticut but the gift was made before September 1, 1991, no exclusion would be available with respect to gifts to that donee for Connecticut gift tax purposes.
A present interest in property is an unrestricted right to the immediate use, possession or enjoyment of property or the income from property (such as a life estate or term certain). Future interests include reversions, remainders and other interests or estates, whether vested or contingent, and whether or not supported by a particular interest or estate, which are limited to commence in use, possession or enjoyment at some future date or time.
Deductions are allowable from the total amount of gifts to the extent that gifts are made to (1) a charitable organization, (2) a governmental entity for exclusively public purposes or (3) a donee who at the time of the gift is the donor's spouse, provided such gifts are included, for Connecticut gift tax purposes, in the total amount of gifts. E.g., a gift of real property situated in Massachusetts to a spouse is not deductible for Connecticut gift tax purposes, because the property is not includable, for Connecticut gift tax purposes, in the total amount of gifts.
CERTAIN GIFTS TREATED AS JOINTLY MADE BY SPOUSES: If both spouses consent, all gifts made to third parties, whether made by one spouse alone or made partly by each spouse, during the calendar year shall be considered as made one-half by each spouse (but only if at the time of the gift each spouse is a citizen or resident of the United States). Thus, the first $20,000 of gifts to any donee by consenting spouses during the calendar year of a present (and not a future) interest in property would be excluded. Where such consent is given, the gift tax liability of the spouses will be joint and several.
An individual is considered to be the spouse of another only if married to the other at the time of the gift and not remarried during the remainder of the calendar year.
The executor or administrator of a deceased spouse, or the guardian or committee of a legally incompetent spouse, as the case may be, may signify the consent, but the consent of an executor or administrator will not be effective with respect to gifts made by the surviving spouse during that portion of the calendar year that his or her spouse was deceased.)
COMPUTATION OF THE GIFT TAX: The gift tax is computed by multiplying the amount of taxable gifts made by the donor to all donees during the calendar year by the tax rate, which ranges from 1% to 6%, depending on the amount of taxable gifts.
|Taxable gifts over||Rate of tax|
|$0 but not over $25,000||1% of the excess over $0|
|$25,000 but not over $50,000||$250 plus 2% of the excess over $25,000|
|$50,000 but not over $75,000||$750 plus 3% of the excess over $50,000|
|$75,000 but not over $100,000||$1,500 plus 4% of the excess over $75,000|
|$100,000 but not over $200,000||$2,500 plus 5% of the excess over $100,000|
|$200,000||$7,500 plus 6% of the excess over $200,000|
CONNECTICUT GIFT TAX BASED ON FEDERAL GIFT TAX: 1991 Conn. Pub. Acts 3 (June Spec. Sess.) incorporates by reference gift tax provisions from the Internal Revenue Code, specifically, 26 U.S.C. §§2503, 2511 to 2514, inclusive, 2516 to 2519, inclusive, and 2522 to 2524, inclusive. For example:
Certain transfers (e.g., under agreements involving the settlement of marital or property rights in connection with a divorce) are not treated as gifts for federal gift tax purposes, and thus will not be treated as gifts for Connecticut gift tax purposes. 26 U.S.C. §2516.
If a qualified disclaimer is made, certain transfers will be deemed never to have occurred for federal gift tax purposes, and thus never to have occurred for Connecticut gift tax purposes. 26 U.S.C. §2518.
GIFTS THAT ARE SUBJECT TO GIFT TAX WILL NOT BE INCLUDABLE, FOR SUCCESSION TAX PURPOSES, IN GROSS TAXABLE ESTATE: Any gift that is subject to the gift tax and otherwise includible in the gross taxable estate of the donor for succession tax purposes will not be includible in the donor's estate for succession tax purposes. The first $10,000 of gifts to any donee during the calendar year of a present (and not a future) interest in property is excluded from the total amount of gifts, so such gifts will be treated as gifts that were not subject to the gift tax.
DUE DATE FOR GIFT TAX RETURN AND PAYMENT: The gift tax return must be filed, and the gift tax paid, on or before April 15 annually for the preceding calendar year.
If the donor becomes legally incompetent or dies before filing the tax return, his guardian or conservator, or his executor or administrator, respectively, shall file the tax return. If there is no duly qualified executor or administrator, the heirs, legatees, devisees and distributees are liable for and required to pay the tax to the extent of the value of their inheritances, bequests, devises or distributive shares of the donor's estate.
If a donor is a part-year resident individual, for Connecticut income tax purposes, one gift tax return must be filed as a resident for the portion of such year during which the donor was a resident, and another return must be filed as a nonresident for the portion of such year during which the donor was a nonresident. The total of the taxes due thereon shall not be less than would be due if the Connecticut taxable gifts reportable on the two returns were includible in one return.
PLEASE NOTE THE FOLLOWING NEW INFORMATION ABOUT DRS.
FOR FURTHER INFORMATION: To order forms and publications or for further information, call the Department of Revenue Services at 860-297-5962 (Hartford area or out-of-state) or 1-800-382-9463 (in-state). Forms and publications may be ordered through voice-mail 24-hours a day by choosing Option 3 on your touch tone telephone.
Electronic Delivery Options: You can also obtain tax forms and publications 24-hours a day from our Web home page at http://www.ct.gov/drs. Telecommunications Device for the Deaf (TDD/TT) users only call 860-297-4911 during business hours.