What tax treatment applies to the full market value of an incomplete gift?

The full market value of an incomplete gift is included in the gross income of the donor. In the context of gift taxes, "incomplete gifts" refer to gifts that have not been fully transferred to the recipient or where the donor retains some control or rights over the gifted assets.

When considering tax implications, incomplete gifts are subject to gift tax rules as they can still be considered part of the donor's estate for tax purposes. If the gift does not meet the criteria for complete transfer and control, it is deemed incomplete and therefore, the donor remains liable for the associated tax obligations. This is why the full market value of the gift is included in the donor's gross income for taxation.

This treatment contrasts with fully completed gifts, which may not trigger immediate tax implications until certain thresholds are met or conditions apply. The other choices either misrepresent the tax status of incomplete gifts or suggest they have no impact on tax calculations, which is not consistent with the IRS regulations surrounding gift taxation and the recognition of value in the transfer process.