Please rerun the column you wrote last year about Christmas gifting. Polly, thank you for remembering. Here is a modified update.

Q: You gave a hilarious presentation to our group about Christmas as seen through the eyes of an attorney. I especially liked your take on Santa Claus, Rudolph, and the elves. Please share some of your observations since Christmas is only a few weeks away.

A: Let us focus upon the practice of gifting. My presentations regarding the world as seen through the eyes of a lawyer can get a bit ruckus. But I will tone down this column and try to be more professional. I hope I do not disappoint you.

Here are the general rules concerning gifting. In order to have made a completed gift, there has to be an intent to give, plus a transfer of possession of the gift in such a way as to make it legally irrevocable (the giver does not have the right to take it back). Also, any conditions that were attached to the gift to make a binding transfer must have been met. LetÕs review some Holiday fact patterns to see how the rules might be applied.

If you find your hidden gift before Christmas, opening the present probably would not make it your property. The intent to give it to you may be clear, but until possession was given or the gift made available in the normal way, the giver always retains the power not to follow through or maybe change gifts at the last minute. (Thus, the old legal chestnut that "possession is nine-tenths of the law" would not carry the day, at least not here.)

Even if the present was under the tree and you didnÕt have to scour the house (or when I was young the barn) to find it, the same rationale would more than likely apply. Opening your present early probably would fail to transfer ownership if the intent was to transfer control on Christmas Eve or Christmas morning, depending upon your family tradition. (Remember, Santa is watching to see if you are naughty or nice.)

But once you open your present and control transfers, then the gift is yours. The giver cannot change his or her mind, even though physically he or she could yank it back (again, another old chestnut of "might makes right" as practiced in many families would not legally carry the day). So Dad, you do not have the right to play with the train set without permission. IT BELONGS TO YOUR CHILD!

However, there might be one recourse. If you know the exact nature of the gift (e.g., the giver told you), and if you changed your legal position to your detriment in reliance thereon, and if it was reasonable for you to do so, then the rules of contract might be used to force the transferor to follow through.

So much for the legal right to keep a gift. But often the tax implication of a gift can be more of a concern. Technically, except between spouses, one person cannot give tax free more than $11,000 of value to another during the entire calendar year, even to children. Thus, birthday presents, the extra money for that Friday night date, keeping gas in the kidÕs car, etc., all need to be taken into account. Thus, if all those transfers during a calendar year, plus the value of the Christmas gift, exceeds $11,000, the giver must pay gift tax on the excess value at a combined federal and state rate of about 43%. The receiver does not have to pay gift tax nor include the value of the gift on his or her income tax return.

However, a properly filed gift tax return would prevent actual tax money from having to be paid by the giver. The transferor would merely deduct the excess amount above $11,000 from his or her overall uniform exemption (further explanation can be for a future column), but who really ever does that for these situations?

On a serious note and for holiday considerations, gifting property that could appreciate rapidly in the future might be a good idea, but gifting appreciated property may not always be wise. For example, although the receiver does not pay any tax upon receiving the property, at a subsequent sale the giftee does get the giftorÕs basis for capital gain purposes so that both the giver and the receiver bear the same tax treatment regardless of whether the giver had in fact sold the appreciated property instead of gifting it or now the receiver sells and pays the tax.

By way of illustration, letÕs say a gift has a value of $11,000 but a zero basis. At the time of the gift, no tax is due from either party. If the receiver then sold the gift and $11,000 gain was recognized, the receiver pays approximately $2200 in taxes. Note the true value of the gift was not the $11,000 but $8800, so the maximum gift value was not transferred. That is why gifting heavily appreciated property may not always be the most efficient way of transferring assets.

A minor may own property but does not normally have the legal right to enter into binding contracts so another rule of thumb is to never give something of value such as stock, real estate, etc., (something needing a legally binding signature) to a minor. Such gifts need to be made to trusts or in such a way that a custodian or guardian has the legal right to deal with the property. Otherwise, a conservatorship through the courts would be needed.

I need to stop because I am out of space. But I hope you get lots of gifts, have a great Holiday season, and remember "never look a gift horse in the mouth."