Bob Jennings recently posted this short summary of the rules for when people need to file Gift Tax returns. 

He did leave out a few key facts that I think people should know.

The only potential tax obligation for gifts is on the Giver (aka Donee).  This usually surprises most people who are so accustomed to paying taxes on money they received.  The recipient has no tax obligation on the receipt of the gift. 

The annual exclusion (currently $14,000 per Donor per Donee) is adjusted upwards every few years in $1,000 increments based on inflation.  It was $13,000 per year from 2009 through 2012 and just increased for 2013.

Gift Splitting between spouses allows large gifts to be considered as made half by each spouse.  That effectively increases the annual excludable gifts to $28,000 per donee (recipient).

The trickiest issue, and the one that requires the most studied consideration, has to do with the basis of transferred assets.  For non-cash assets that have increased in value, the current fair market value is used to determine the size of the gift; but the cost basis of the gift for the recipient remains the same as it was for the giver.  This effectively transfers the capital gain obligation from  the donor to the donee.  Sometimes this may be a wise move, but often it may have been better for the donor to sell the asset and just give the money.  This is a time when the advice of an experienced tax professional is critical. 

  Of course, if he had included all of these additional points, it would no longer be a short summary.