Question

Course name: Estate and gifts tax

Assume D, a widower, made no prior taxable gifts. Consider §§ 2501, 2502, 2505, and 6019.

a. In 2012, D makes his first taxable gift in the amount of $4,500,000. What are the gift tax ramifications of the transfer? What is the amount of the gift tax payable? Must D file a gift tax return?

b. In January of 2014, D makes a taxable gift in the amount of $1,500,000. What are the gift tax ramifications of the transfer? What is the amount of the gift tax payable? Must D file a gift tax return?

c. What would be the amount of the gift tax due if D made no gifts before 2014 but made taxable gifts of $6,000,000 in 2014? What are the gift tax ramifications of the transfer? What is the amount of the gift tax payable?

d. How would the answers to b and c change if the taxable gifts were made in 2015 instead of in 2014? Carefully consider § 2010(c)(2)(B) in relation to § 2502(a)(1).

Answer 1

^ () Gift made - $6,000,000 Life time exemption in 2014 = Less $5,340,000 $ 660,000 2014 exemption of gift amount - Less : $14,000 of 14,000 to per person Taxable value = $646,000 Tax Calculation for 2014 Gift tax liability Tax on taxable value of Gifts of 500000 Tax on balance 146000 @ 37% = $155,800 020 Total Tax – $209, 820

(C) The Amount of Gift tax= $209,820