ExpertMedium1 markMultiple Choice
CPA · Question 11 · Area I: Individual Compliance and Planning
In Year 1, a married couple agrees to gift split. One spouse gives $50,000 cash to their son. Assume the annual gift tax exclusion is $18,000 per donee. What is the amount of the taxable gift for the donor spouse?
In Year 1, a married couple agrees to gift split. One spouse gives $50,000 cash to their son. Assume the annual gift tax exclusion is $18,000 per donee. What is the amount of the taxable gift for the donor spouse?
Answer options:
A.
$7,000
B.
$14,000
C.
$25,000
D.
$32,000
How to approach this question
1. Split the gift: $50,000 / 2 = $25,000 per spouse. 2. Apply exclusion: $25,000 - $18,000 = $7,000 taxable gift per spouse.
Full Answer
A.$7,000✓ Correct
A
IRC §2513. Gift splitting allows the $50,000 gift to be treated as $25,000 from each spouse. Each spouse applies their $18,000 annual exclusion (IRC §2503(b)). Taxable gift per spouse = $25,000 - $18,000 = $7,000.
Common mistakes
Applying the exclusion to the total before splitting, or forgetting the exclusion entirely.
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