> GP said that gifts are taxed if you exceed the annual limit, and this is 100% wrong.
No, he said “only if” not just “if”, and this is precisely, 100% correct:
X only if Y = X does not occur except when Y occurs (but does not specify whether X cab fail to occur if Y occurs)
X if Y = X always occurs if Y occurs (but does not specify if X can occur without Y)
X if, only if, Y (sonetimes written X iff Y) = X occurs always and only when Y occurs.
(Actually, he said “are taxable”, not “are taxed”, so “only if” would also be correct, more on that below.)
> If you stay below the annual limit every year, you will never exceed the lifetime limit, unless you and the recipient live to 140 or something
No, for two reasons: one, gifts that are below the annual exclusion aren’t taxable and don’t count against the lifetime exemption. Secod, even if you just passed the exclusion for a single recipient (so, you had a taxable gift $1 more than the exclusion level each year—note, the full amount is taxable if you exceed the exclusion), you would never (given historical relationship) reach the lifetime exemption, which annually has increased by more than the annual exclusion.
Gifts of the type subject to tax, to a single recipient, in a single year, exceeding the annual exclusion amount are taxable and must be reported. (Note that the annual exclusion is per recipient from a donor.)
But taxable gifts are only actually taxed on the amount the donor has exceeded the current lifetime exemption (across all recipients).