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What role does intent play in determining whether a transfer is a gift and therefore not subject to the income​ tax?

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Final answer:

The role of intent in determining whether a transfer is a gift and not subject to income tax is significant. The donor must have the intention of making a present donative transfer, without expecting anything in return. If the transfer is made with the intention of repaying a debt, it would not be considered a gift.

Step-by-step explanation:

The role of intent in determining whether a transfer is a gift and therefore not subject to income tax is significant. In order for a transfer to be considered a gift and not taxable, the donor must have the intention of making a present donative transfer, without expecting anything in return. The presence of intent is crucial in differentiating a gift from a transaction or a payment. For example, if a person transfers money to another person with the intention of repaying a debt, it would not be considered a gift and would be subject to income tax.

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