But I just don’t see any way this would be challenged by the IRS. There’s a reason that’s the amount for a tax free gift. If he was providing the service for a whole bunch of people and essentially escaping an income tax, that’s one issue. This is a single case and a small amount of money. The IRS has bigger fish to fry.

Also, their relationship goes beyond just this. They know each other well, he helps her in lots of different ways, he’s a client, he’s somewhat of a friend and this relationship has existed for decades. She could point to any number of reasons for why she decided to send a gift.

I fully appreciate that this is your field and you are being smart and following the letter of the law. But in my opinion, there is zero chance this would be challenged unless it was a recurring event or there was somehow direct dealings to determine a price for service. As the story stands, it would be their word against hers in terms of why she sent the gift and that could not be proven in a court.

And I’ll flatly say that I could be 100% wrong. This is just how I see it. But thank you for contributing to this thread. I appreciate your posts.