A. By IRS Code the gift tax value is the full value of the property, without any discount. Therefore, in the above example for gift tax purposes Jane transferred her home valued at $250,000.00 while retaining a life estate and she must file a federal gift tax return reporting that in the transaction, she utilized $250,000.00 of her federal gift tax credit and New York State gift tax credit. However, she would not have to pay any federal or state gift taxes as long as she had not made other large gifts against these credits.