Friday, December 28, 2012
The problem with using a check to gift money to take advantage of either the annual exclusion or lifetime gift tax exemption is that the donor can revoke the gift before the check clears the bank. The problem with this is that the gift is not considered complete until the revocability period ends, which can mean that a gift that was intended for 2012 might become a gift in 2013. The safest way to ensure that the gift is made in 2012 is to ensure that the check is delivered, the recipient deposits the check, and it clears by the end of this year. If a problem occurs, Revenue Ruling 96-56 provides a safe harbor.
See Charles Rubin, Last Minute Gifting By Check, JDSupra Law News, Rubin on Tax, Dec. 21, 2012.
Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.)) and Brian Cohan (Attorney at Law, Law Offices of Brian J. Cohan, P.C.) for bringing this article to my attention.