What is Legal About Cash Gifting?

I was recently invited to give a large gift of cash to a stranger. This is not the first time I have been involved in an abundance endeavor. I decided to do some research into the “cash leveraging system” to see if this form of “gifting” is legal or not. Please note: this article only shares what I have discovered that makes a gifting program legal. It does not address the intricacies of what could make such an activity illegal, albeit I give a general idea of that. There is plenty of material available to make a case either way. If you are considering a gifting program with like-minded people, be aware of the gifting laws. Wikipedia has a good overview of the gifting laws. The U.S. gifting rules are found in the IRS Tax Code, Title 26, Sections 2501-2504 and 2511.

This article is for informational purposes only, so for you who are thinking to join a gifting activity, I urge you to do your own research to satisfy yourself as to whether or not you think participation in one of these gifting programs is legal. Please be conscious that gifting done in an illegal way has been successfully prosecuted in a number of states. The tax law does not make gifting legal or illegal; it simply tells you the tax consequences of the arrangement. Be aware that calling it a gift doesn't necessarily make it one. When determining the tax effects, the tax law will look at whether the intent was truly to donate when the gift was given.

All of this said, I will now share what I am seeing has been upheld for keeping gifting legal. Across the board, those people whose verbiage is focused on helping people and the giving of the gifts from the heart, from wanting to do something wonderful for someone else without expecting anything in return, seem to be the ethical gifting programs. Those who focus on the big cars and big houses are obviously involved in gifting for the purpose of “making money.”

Of course, when someone decides to get into gifting, they know that eventually it may be their turn to be a receiver, but this is not the answer that a judge will align with should someone in a gifting program end up in court. Truly, gifting means that which is given is a gift. For example, when you give a toy to a child for her birthday, you don’t expect to get anything back in return, right? So when you give a gift of money, likewise you should not expect to receive anything in return! This is what a true gift is; this is the heart and soul of legal gifting.

In my own research and discovery, I have found many folks who are promoting gifting programs and are “stepping over the line” with the way they are publicizing their programs. In other words, they are emphasizing this activity as a way to make lots of money.

If you are thinking of getting involved in a gifting activity, understand that gifting is not a business. Period. There is no selling of anything, no solicitation, it’s not a commercial enterprise, there is no company, it is not an investment, it is not conducted for profit, it is not network marketing or MLM, there are no public gatherings and there is no service provided. If you see a website inviting you to a home-based business, and if it turns out that the “business” is gifting, I advise you to run the other way.

If you are already involved in a gifting program, take a look at the words that you are using when inviting people to participate, or that are used on a webpage that is included in your system. Words used in a gifting activity are very important – they can be the fine line between keeping it legal or not. Below is a sampling of words to never use as well as words that should be used. This is by no means a complete list.

This is a sampling of words that are not used in a gifting activity:

Buy in, Downline, Earn, Earnings, Getting paid, Guarantee, I made, Income, Investment, Make, Make money, Multiply your money, Net, Paid earnings, Paid out, Pay, Payout, Profit, Purchase, Recruit, Return on your money, Sign up, Sponsor, Sure bet, Took in, Upline, You will make

This is a sampling of the words used in a gifting activity:

Activity, Associates, Care, Community, Constitutional Rights, Family, Fellow man, Free association, Gift, Gifter, Give, Giving, Golden, Helping others, I gave, I have gifted, I have received, Invitation, Invite, Invited by, Kindness, Nice people, Participant, Participation, Receive, Register your gift, Sharing

Gifting is a concept embraced by cultures around the world and has been in existence throughout history. Again, be persistent with your research so you know what you are doing and can proceed ethically.