I don't know what FD reported and am certainly not here to defend him. I am, however, a certified (but not verified ) tax geek and can confirm that gifts received from relatives are not taxable income, regardless of the amounts.
However, according to H&R Block, there is a limit of $15,000 per recipient, per year for a gift.
There are also additional issues when a gift has been made to a Business as opposed to an Individual.
The $2.5+ Million is the issue here and although the receiver may not initially owe taxes on the gift, it does then cause an issue when the receiver has counted the 'gift' as a Loan for many years and then changes it to Equity. Now this is where it gets tricky, since the Loan has now been called a Loan on the Loan Documents, Equity on a Legal Tax Document, and a Gift on the Record in a Court of Law.
Again, this is not my forte, but I do know that someone owes money if in fact the $2.5+ Million was a Gift.
Usually, the Giver would file on their taxes that a Gift was made and if the amount is over $15,000 per person per year, then taxes are owed.
Not to mention any Fraud Charges that FD would face with his Fraudulent Tax Returns for all the years he claimed a Loan when it was a Gift.
In FD's case, this becomes an issue because he LIED, LIED, and LIED some more, when he had the Loan changed to Equity and when he testified today that the Loan was actually a Gift.
IF the Loans were gifts, then I am sure that HF, being the money man that he was, would have filed them as gifts and would have paid any taxes associated with the gift.
I would think that Attorney Weinstein and his investigations into the HF Estate would have found any mention of a Gift made to FD and/or his business.
IMO.