ExpertMedium1 markMultiple Choice
CPA · Question 09 · Area I: Individual Compliance and Planning
A married couple agrees to 'gift split' for all gifts made in Year 1. The annual exclusion is $18,000 per donee. One spouse gives $50,000 to their son and $10,000 to their daughter. The other spouse makes no gifts. What is the total taxable gift amount reported on the couple's gift tax returns combined?
A married couple agrees to 'gift split' for all gifts made in Year 1. The annual exclusion is $18,000 per donee. One spouse gives $50,000 to their son and $10,000 to their daughter. The other spouse makes no gifts. What is the total taxable gift amount reported on the couple's gift tax returns combined?
Answer options:
A.
$14,000
B.
$24,000
C.
$12,000
D.
$0
How to approach this question
1. Split gifts 50/50. 2. Apply $18k exclusion per donor per donee. 3. Sum taxable amounts.
Full Answer
A.$14,000✓ Correct
A
IRC §2513. Gift to Son: $50,000. Split -> $25,000 per spouse. Less $18,000 exclusion each = $7,000 taxable each. Total $14,000. Gift to Daughter: $10,000. Split -> $5,000 per spouse. Less $18,000 exclusion -> $0 taxable. Total Taxable Gifts = $14,000.
Common mistakes
Applying exclusion to the total before splitting; forgetting the exclusion applies to each donee separately.
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