What is Gift Tax?

A gift tax is a tax that is applicable when a person gives a present, of cash or actual items, to another person. You don't always have to pay taxes on gifts you've received. One such occasion where you would be required to pay a gift tax is when you win an item on a game show. Should you ever recieve a substantial gift that can be minimally valued at a certain amount, say ten thousand dollars, can be taxed as the property is exchanged into your custody. This transfer of value is treated as a commercial transaction and thus fair game for the taxman to get his hands on a percentage of the value.