What does it mean for a gift to have "less than full consideration"?

When a gift is described as having "less than full consideration," it indicates that the payment received for the gift is below its fair market value. This situation typically arises in the context of gifting scenarios where the donor transfers an asset to the recipient, but either no or inadequate compensation is exchanged for it. For example, if a property worth $100,000 is sold to a friend for $60,000, the seller has given a gift of $40,000, which is the difference between the market value and the amount received.

This concept is important in the context of gift tax regulations, as gifts that involve less than full consideration may trigger tax implications for the donor. Understanding this notion can help individuals navigate their tax obligations when making or receiving gifts, recognizing that the tax system views the difference between market value and consideration received as a gift.

The other options do not accurately capture the meaning of "less than full consideration." Giving a gift on credit does not pertain to the concept of full consideration, as it implies the expectation of future payment. A transaction that involves no payment at all may technically fall under gift categorization but does not specifically explain the phrase in question. Additionally, intangible gifts can indeed have assigned values and the phrase does not