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Practice CPA®CPA TCP Practice Exam 5Question 08

Easy1 markMultiple Choice

Area I: Individual Compliance and PlanningTCPIndividual TaxGift Tax

CPA · Question 08 · Area I: Individual Compliance and Planning

A taxpayer gives their child a gift of $100,000 in Year 1. The annual gift tax exclusion for Year 1 is $18,000. The taxpayer is single and has not made any other gifts. What is the amount of the taxable gift for Year 1?

Answer options:

A.

$100,000

B.

$82,000

C.

$0

D.

$92,000

How to approach this question

Subtract the annual exclusion stated in the scenario from the total gift amount.

Full Answer

B.$82,000✓ Correct

B

IRC §2503(b). The first $18,000 (as stated in scenario) is excluded. The remainder is a taxable gift. $100,000 - $18,000 = $82,000.

Common mistakes

Ignoring the exclusion; applying the exclusion to the wrong amount.

Question 07 All questions Question 09

Practice the full CPA TCP Practice Exam 5

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