Question 1

A taxpayer gifts $100,000 cash to their child in Year 1. The annual gift tax exclusion for Year 1 is $18,000 (stated). The taxpayer is married and elects gift splitting with their spouse. Neither spouse has made prior taxable gifts. What is the amount of the taxable gift for the taxpayer in Year 1?

Accepted Answer

Step 1: Split the total gift in half ($50k). Step 2: Subtract the annual exclusion ($18k) from that half. Result is the taxable gift for the donor.

Question 2

What mistakes do candidates make on this CPA question?

Accepted Answer

Subtracting the exclusion from the total before splitting, or forgetting to split the gift amount itself.

A taxpayer gifts $100,000 cash to their child in Year 1. The annual gift tax exclusion for Year 1 is $18,000 (stated). The taxpayer is married and elects gift splitting with their spouse. Neither spouse has made prior taxable gifts. What is the amount of the taxable gift for the taxpayer in Year 1?

How to approach this question

Full Answer

Common mistakes

Practice the full CPA TCP Practice Exam 2

More questions from this exam