What is indicated by the term "present interest" in donations?

The term "present interest" in donations refers to gifts that are immediately available to the recipient. This means that the recipient can access, use, or enjoy the benefits of the gift right away. Present interest is an important concept in the context of tax regulations, particularly in relation to the gift tax, as gifts with present interest qualify for the annual exclusion amount, allowing donors to give without incurring tax liabilities up to a certain limit.

In contrast, gifts that have been promised but not yet given represent a future interest, as they are contingent upon some conditions or timelines before the recipient can access them. Gifts with restrictions could also potentially limit the recipient's immediate benefits, and thus would not meet the criteria for present interest. Likewise, gifts that are non-cash in nature, such as property or services, may not necessarily imply that they are available for immediate use and enjoyment. This distinction highlights why the correct choice focuses on the immediate availability of the gift to the recipient.