How does the IRS determine if a gift of property is taxable?

The IRS determines if a gift of property is taxable based on the value of the property at the time of the gift. When a donor gives a gift, the fair market value of that property is considered for the purposes of the gift tax. This is crucial because gifts over a certain threshold amount may trigger tax liabilities. The fair market value reflects what the property would sell for in an open and competitive market, making it a clear and objective measure to assess taxation.

In contrast to the other considerations, the age of the donor doesn't impact the taxability of a gift. Similarly, the recipient's income level does not affect the valuation for gift tax purposes; the tax is centered solely on the donor's act of gifting and the value of the gift itself. Additionally, relying on the property's historical value would not provide an accurate assessment in the context of a gift tax, as historical value may not reflect current market conditions or the fair market value relevant at the time of the gift. Thus, the correct and relevant measure for determining if a gift is taxable is indeed its value at the time of the gift.