ExpertEasy1 markMultiple Choice
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?
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
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.
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