If a person receives a gift worth over $10,000 from another American, it is potentially taxable, but how is the "fair market value" of the gift determined?
For example, let's say a man gives his girlfriend a diamond ring that cost $80,000 at the jeweler, but if the girl were to sell it, she might only receive $35,000. In other words, if she had the ring appraised, the appraised value is $35,000.
Is the value of the gift considered the retail purchase price or the appraised value?
As long as we are on the subject of diamond rings, do women who become engaged have to declare diamond rings as gifts and pay taxes on them if their value is over the limit?