[Quilla]

I believe that if my mother should gift $10,000 per child ($11,000 in 2002) annually, her estate is simply reduced by that amount. If prior to her death she gifted me an additional $200,000, that amount would be taxable at the effective gift tax rate (33%) rather than the estate tax rate of 50% applicable to the remaining $800,000. In other words, the first $11,000 is tax free.

Outrageous, any way you look at it.

[Quilla]

Coincidentally, a coworker of mine called the IRS last Friday about this. He was told that the first million in tax free to the recipients.