What is the primary purpose of the donor's tax return?

The primary purpose of the donor's tax return is to assess tax liability on gifts. This return is specifically designed to report gifts made by a donor that exceed certain annual thresholds established by tax laws. These gifts may be subject to federal gift tax, and the return helps determine how much tax, if any, is owed based on the value of the gifts provided.

The significance of this return lies in its role in ensuring compliance with tax regulations concerning gifting, which can impact both the donor's estate and their tax obligations. Gift tax laws are in place to prevent individuals from avoiding estate taxes by gifting away their wealth before death. Therefore, the donor's tax return provides a necessary mechanism for tracking these transactions and calculating potential tax liabilities.

In contrast, the other options refer to different financial aspects. Documenting property transactions and reporting total income are not the focus of donors' tax returns, which center explicitly on gifts. Filing for deductions, while related to tax returns in general, does not encompass the main purpose of the donor's tax return, which specifically evaluates and manages tax responsibilities concerning gifts.