A more thorough explanation:

An annual exclusion gift is a type of gift that is usually given in the form of cash, stocks, bonds, portions of real estate, or forgiving debt on a family loan. The amount of the gift must not exceed the annual gift tax exclusion set by the federal government. This means that the gift is tax-free and does not require the recipient to pay any taxes on it.

For the year 2021, the annual gift exclusion amount is $15,000 per donor per recipient. This means that a donor can give up to $15,000 to each recipient without having to pay any gift tax. If the donor gives more than $15,000 to a recipient, they will have to pay gift tax on the excess amount.

Examples of annual exclusion gifts include:

• John gives his daughter $10,000 in cash for her birthday.
• Susan gives her son 100 shares of stock worth $15,000.
• Tom forgives a $12,000 debt that his brother owes him.

These examples illustrate the definition of an annual exclusion gift because they are all gifts that do not exceed the annual gift tax exclusion amount of $15,000. Therefore, they are all tax-free and do not require the recipient to pay any taxes on them.