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§ 8.2 FEDERAL GIFT TAXexclusion is a fixed dollar amount that is allowed as an exclusion from gift tax.Currently, the amount of the exclusion is $11,000. 33There are a number of restrictions on the availability or applicability of theannual exclusion.First, the exclusion is available annually. It may not be carried over toanother year if it is unused or underused.Second, currently the exclusion is available for the first $11,000 of a gift toeach recipient thereof, termed a donee. There is no limit on the number of doneesthat may be gifted property covered by the annual exclusion. 34Third, only gifts of present interests are considered for purposes of theannual exclusion. Gifts of future interests in property, 35 including reversions andremainder interests, 36 are denied the exclusion.Certain transfers made for the benefit of minors are not considered to befuture interests under the annual exclusion. A transfer for the benefit of a minorqualifies for the annual exclusion when:• the property, and income therefrom, may be used only by or for the benefitof the minor before he or she reaches 21, and• any remaining property and income is distributed to the minor whenhe or she reaches 21, or, if the minor dies before reaching 21, to his orher estate, or as he or she appoints pursuant to a general power ofappointment. 37(i) Valuation of Gift TransfersThe federal gift transfer tax applies to the value of the property transferred as ofthe date of transfer. 38 However, when the gift is also a direct skip within themeaning of the generation-skipping transfer tax (see below), the value of the giftis increased by the amount of the generation-skipping transfer tax imposed. 39The value of money gifts is the amount given. A gift of property other thanmoney is valued at its fair market value. 40In the case of transfers of property for less than full and adequate consideration,the value of the property transferred for gift tax purposes is the fair marketvalue of the property less the consideration received. 41 For example, a parentpurchased real estate that has since greatly appreciated in value. It was purchasedyears ago for $50,000. Today, it has a fair market value of $250,000. Theparent decides to give the realty to an only child, and transfers the property to33 IRC § 2503. This amount is indexed for inflation (IRC § 2503(b)(2)); the amount for 2004 is $11,000. Rev.Proc. 2003-85, 2003-49 I.R.B. 1184, § 3.26(1).34 The annual exclusion may be utilized in conjunction with contributions made to a noncharitable tax-exemptorganization. See, e.g., Priv. Ltr. Rul. 9818042, concerning gifts made to a tax-exempt social club. See also§ 1.5, note 140.35 IRC § 2503(b).36 Reg. § 25.2503-3.37 IRC § 2503(c); Reg. § 25.2503-4(a).38 IRC § 2512(a).39 IRC § 2515.40 Reg. § 25.2512-1.41 IRC § 2512(b); Reg. § 25.2512-1. 229