Which statement best describes the tax implications of receiving a gift?

The statement that gifts are subject to tax only if above a certain limit is correct because the IRS allows individuals to gift a certain amount each year without incurring tax liabilities. As of recent guidelines, there is an annual exclusion limit, which for 2023 is $17,000 per recipient. This means that if a gift is within this threshold, it does not trigger any tax for the recipient nor does it reduce the lifetime gift tax exclusion for the donor. Gifts that exceed this limit can require the donor to file a gift tax return, but the recipient typically does not include these amounts as income for tax purposes. Thus, understanding the annual exclusion limit helps clarify why not all gifts are taxable and emphasizes the tax requirements based on the value of the gift.