894 / When is a gift complete for purposes of the federal gift tax?
The gift is complete once the donor parts with dominion and control over the property or interest in the property, leaving him no power to change its disposition, whether for the donor’s own benefit or for the benefit of another.1 In general, a transfer of an interest in a revocable trust is incomplete until the interest becomes irrevocable. However, if the interest becomes irrevocable at the grantor’s death, it will generally be subject to estate tax (see Q 824) rather than to gift tax.
If a donor delivers a properly endorsed stock certificate to the donee or the donee’s agent, the gift is completed for gift tax purposes on the date of delivery. If the donor delivers the certificate to a bank or broker as his agent, or to the issuing corporation or its transfer agent, for transfer into the name of the donee, the gift is completed on the date the stock is transferred on the books of the corporation.2
A transfer of a nonstatutory stock option which was not traded on an established market would be treated as a gift to a family member on the later of the following: (1) the transfer; or (2) the time when the donee’s right to exercise the option is no longer conditioned on the performance of services by the transferor.3