John Edwards allegedly has been funneling $15,000 a month in hush money/child support to his mistress Rielle Hunter. Has he paid a gift tax and avoided money laundering pitfalls?  The mother of his love child reportedly received the funds through an intermediary named Andrew Young, who claims to be the child's father in behalf of his friend Edwards. Nearly everyone (but people who rely solely on the MSM for news) knows this courtesy of the National Enquirer,

Who pays the gift tax?
The donor is generally responsible for paying the gift tax. Under special arrangements the donee may agree to pay the tax instead. Please visit with your tax professional if you are considering this type of arrangement.

What is considered a gift?
Any transfer to an individual, either directly or indirectly, where full consideration (measured in money or money's worth) is not received in return.

Gift Tax

The gift tax applies to the transfer by gift of any property. You make a gift if you give property (including money), or the use of or income from property, without expecting to receive something of at least equal value in return. If you sell something at less than its full value or if you make an interest-free or reduced-interest loan, you may be making a gift.

The general rule is that any gift is a taxable gift. However, there are many exceptions to this rule.

Generally, the following gifts are not taxable gifts:

• Gifts, excluding gifts of future interests, that are not more than the annual exclusion for the calendar year,
• Tuition or medical expenses you pay directly to a medical or educational institution for someone,
• Gifts to your spouse,
• Gifts to a political organization for its use, and
• Gifts to charities.

Annual exclusion.   A separate annual exclusion applies to each person to whom you make a gift. In 1998, the gift tax annual exclusion became subject to cost-of-living increases. The exclusion for 1998 through 2001 was $10,000 and for 2002 through 2005 the exclusion was $11,000. For 2006 and 2007 the amount is $12,000. Thus, in 2007, you generally can give up to $12,000 each to any number of people in 2007 and none of the gifts will be taxable.

Filing a Gift Tax Return

Generally, you must file a gift tax return on Form 709 if any of the following apply.

• You gave gifts to at least one person (other than your spouse) that are more than the annual exclusion for the year.
• You and your spouse are splitting a gift.
• You gave someone (other than your spouse) a gift of a future interest that he or she cannot actually possess, enjoy, or receive income from until some time in the future.
• You gave your spouse an interest in property that will be ended by some future event.

You do not have to file a gift tax return to report gifts to (or for the use of) political organizations and gifts made by paying someone's tuition or medical expenses.

You also do not need to report the following deductible gifts made to charities:

• Your entire interest in property, if no other interest has been transferred for less than adequate consideration or for other than a charitable use; or
• A qualified conservation contribution that is a restriction (granted forever) on the use of real property.

"Whoever . . . knowing[ly] . . . conducts or attempts to conduct . . . a financial transaction which in fact involves the proceeds of specified unlawful activity . . . with the intent to promote the carrying on of specified unlawful activity . . . shall be sentenced to a fine of not more than $500,000 or twice the value of the property involved in the transaction, whichever is greater, or imprisonment for not more than twenty years, or both."