Gift tax valuation is a process used to determine the value of assets given as gifts for tax purposes. The IRS requires that the fair market value of the gift be assessed at the time of transfer. This valuation is crucial for ensuring that any applicable gift taxes are calculated accurately. Factors such as the type of asset, market conditions, and potential discounts are considered in the valuation. Proper gift tax valuation helps individuals comply with tax regulations and avoid penalties, providing transparency in the transfer of wealth between parties.