ExpertMedium1 markMultiple Choice
CPA · Question 17 · Area I: Individual Compliance and Planning
A married couple agrees to 'gift split' for all gifts made in Year 1. Spouse A gifts $56,000 to their niece. Spouse B gifts $10,000 to the same niece. Assume the annual exclusion is $18,000. What is the total amount of taxable gifts for Spouse A in Year 1?
A married couple agrees to 'gift split' for all gifts made in Year 1. Spouse A gifts $56,000 to their niece. Spouse B gifts $10,000 to the same niece. Assume the annual exclusion is $18,000. What is the total amount of taxable gifts for Spouse A in Year 1?
Answer options:
A.
$38,000
B.
$15,000
C.
$20,000
D.
$10,000
How to approach this question
1. Sum all gifts to the donee ($56k + $10k = $66k). 2. Split in half ($33k each). 3. Subtract annual exclusion from each half ($33k - $18k = $15k).
Full Answer
B.$15,000✓ Correct
B
IRC §2513. Total gifts to niece = $56,000 + $10,000 = $66,000. <br/>Deemed gift by Spouse A = 50% * $66,000 = $33,000. <br/>Taxable gift for Spouse A = $33,000 - $18,000 (exclusion) = $15,000.
Common mistakes
Only splitting Spouse A's gift and ignoring Spouse B's gift to the same person.
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