Chartered Retirement Planning Counselor (CRPC) Practice Exam 2026 – Comprehensive All-in-One Guide for Exam Success!

The federal gift tax is applied to inter vivos transfers, which are gifts made during the donor's lifetime rather than upon their death. This tax is designed to tax the value of property or assets that are transferred without full consideration (i.e., without receiving something of equal value in exchange). Therefore, any transfer of assets or property can potentially be subject to the gift tax, regardless of whether the donor intended it to be a gift or retained some level of control over the property.

This means that if someone gives or transfers money, property, or assets to another person without receiving adequate compensation, the IRS considers this a gift for tax purposes. The intent behind the transaction does not change its classification under the gift tax laws—it's the nature of the transfer itself that matters.

While there are exclusions and exceptions to the federal gift tax, such as the annual exclusion limit, the foundational idea is that the tax applies broadly to inter vivos transfers, making that the correct answer to the question.