Author: Leon Clinton

If you give money or property, you may be legally required to file a gift tax return with the IRS—even if you owe no gift tax. 

In fact, most people who file gift tax returns do not pay any gift tax because each individual has a generous lifetime gift tax exemption of $13.99 million (for 2025). Married couples can effectively double this amount by combining their exemptions.

Even when no tax is due, you must file a gift tax return whenever you make a “reportable gift.” This allows the IRS to track both the total amount you have gifted during your lifetime and the remaining balance of your lifetime estate and gift tax exemption.

You are required to file a gift tax return if you do any of the following:

• Give any one person more than the annual exclusion amount ($19,000 in 2025).
• Elect to split gifts with your spouse.
• Make a gift of a future interest, such as certain transfers to a trust.
• Front-load multiple years of contributions into a Section 529 plan.
• Give certain types of gifts to your spouse.

If you must file a gift tax return, you also need to report any charitable gifts made during the year. These charitable gifts are not subject to gift tax and do not reduce your lifetime exemption, but you must disclose them on the gift tax return.

Gift tax returns are due at the same time as your income tax return. However, they must be filed separately on paper, as joint gift tax returns do not exist—each spouse must file individually.

Your return must include detailed information for each reportable gift, including its fair market value. Gifts that are difficult to value, such as business interests, require either a professional appraisal or a thorough explanation of how you determined the value.

The IRS may impose a failure-to-file penalty of 5 percent per month if you do not file a required gift tax return. But this penalty applies only when you owe gift tax, which is uncommon.

When no penalty applies, it is still wise to file a gift tax return when required. Filing starts the three-year statute of limitations during which the IRS may question your valuations. 

Without a filed return, the IRS has no time limit to challenge the value of your gifts. Filing also provides a clear record of your gifting history and helps you track your remaining lifetime exemption.

If you want to discuss gift taxes, please call me on my direct line at 408-778-9651  

• By Leon Clinton
• December 23, 2025

If you operate multiple corporations, you might assume each one entitles you to its own set of tax benefits—separate Section 179 limits, additional credits, or even expanded retirement plan flexibility. 

Unfortunately, the tax code doesn’t see it that way. Hidden within IRC Section 1563 are rules that can quietly collapse your corporations into a single “controlled group,” dramatically limiting the deductions and credits you thought you were multiplying.

Here’s what you need to know.

The Hidden “One Taxpayer” Rule

Under Section 1563, the IRS evaluates who owns and controls your corporations. If the ownership structure meets certain thresholds—either directly or through attribution among family members, entities, or even stock options—the IRS treats all related corporations as one economic unit. This combined unit, known as a “controlled group,” receives only one set of key tax benefits, no matter how many corporations exist on paper.

This can reduce or eliminate tax advantages you expected. For example, businesses within a controlled group must share one Section 179 deduction limit, one accumulated earnings credit, and one pool of R&D tax credits. Employee benefit plans must meet coverage rules across the entire group. And while each corporation still files its own return, the controlled group must coordinate to allocate benefits properly—otherwise, the IRS will make the allocation for you.

How Controlled Groups Are Triggered

Controlled group status is based purely on ownership, not on business operations. The rules generally fall into three categories:

1. Parent-subsidiary groups, where one corporation owns at least 80 percent of another
2. Brother-sister groups, where five or fewer common owners control multiple corporations and share more than 50 percent identical ownership
3. Combined groups, which blend the two

Complicating matters further, attribution rules may treat you as owning stock held by your spouse, children, parents, certain trusts, or entities you own—sometimes pulling corporations together unexpectedly.

What You Can Do

The good news: with advance planning, you can often avoid or unwind a controlled group legally and safely. Strategies may include adjusting ownership percentages, adding new owners, restructuring voting rights, or using non-corporate entities such as LLCs for new ventures. And if a controlled group is unavoidable, proactive allocation of deductions ensures you—not the IRS—decide where your tax benefits go.

If you want to discuss the controlled group rules, please call me on my direct line at 408-778-9651  

• By Leon Clinton
• December 19, 2025

I want to alert you to a tax credit that is set to expire soon. You can claim a federal income tax credit for installing electric vehicle chargers or other alternative-fuel refueling equipment, but the credit disappears for anything you place in service after June 30, 2026. 

You still have time to benefit, but you must act quickly.

The credit generally equals 30 percent of the cost of qualifying equipment. If you install equipment at your principal residence for personal use, you can claim a credit up to $1,000, provided your home sits in an eligible census tract. 

If you install equipment for business use, you can claim much larger credits—up to $100,000 per item—and you can increase the credit rate from 6 percent to 30 percent when you meet specific wage and apprenticeship rules.

Strict location rules now block many taxpayers from qualifying, so I encourage you to check your proposed installation site before you move forward. To claim the credit, you must place the equipment in a low-income or non-urban census tract—an area that covers roughly 97 percent of the U.S. land mass.

You also must start as the original user of the equipment and install components that function together as an integrated refueling or charging system.

When equipment is used for both personal and business purposes, you must split the credit based on your actual use percentages. Businesses with fleets or multiple charging ports can secure substantial credits by properly allocating all associated costs, including chargers, pedestals, electrical panels, wiring, and smart-charge management systems.

You claim the credit on IRS Form 8911. Business credits flow to Form 3800, and personal credits flow to Schedule 3 of Form 1040. You must also reduce the equipment’s basis by the amount of the credit and follow recapture rules if the equipment stops qualifying.

If you plan to install charging equipment at your home or business, I recommend evaluating your project now so you don’t miss this valuable tax benefit. I can help you confirm eligibility, estimate your credit, and structure your installation to maximize savings.

If you want to discuss this tax credit, please call me on my direct line at 408-778-9651  

• By Leon Clinton
• December 16, 2025