If taxpayer A gifts taxpayer B $1M today, taxpayer B owes $0 in taxes to the US federal government. Taxpayer A also owes $0, assuming that is all they have gifted in their life. But they do have to file a form with the IRS tabulating the total they have gifted, minus the annual exclusion ($17k).

Neither taxpayer A nor taxpayer B have a federal tax liability for gifting more than the annual exclusion amount.

So I do not see how the gift tax, which would implicitly involve a tax liability for the gift, has a limit of $17k.

Am I incorrect?

> If taxpayer A gifts taxpayer B $1M today, taxpayer B owes $0 in taxes to the US federal government.

If A is alive when that happens then that is wrong. B will be taxed on the amount of $1M - 17k because the gift tax applies not the estate tax.

If A were dead and gifted B in their will, then you would be correct because the estate tax applies in this scenario.

Again, since we're taking about loans and gifts while a person is alive in this thread, the first scenario of the gift tax applies.

This is incorrect. Taxpayers are allowed to apply their lifetime gift exclusion before death. Line 7 on Part 2 of Form 709.

https://www.irs.gov/pub/irs-pdf/f709.pdf

https://www.irs.gov/pub/irs-pdf/i709.pdf#page=20

I stand corrected. Thank you.

A gift recipient does not owe tax, so taxpayer B never owes any tax for receiving a gift.

https://www.irs.gov/businesses/small-businesses-self-employe...

>Who pays the gift tax?

> The donor is generally responsible for paying the gift tax. Under special arrangements the donee may agree to pay the tax instead. Please visit with your tax professional if you are considering this type of arrangement.

Ok, after a little more research, I think you're right and I stand corrected. Thank you for your patience!