Question

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

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

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?

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Solution: The gift tax is a tax on the transfer of money or property to another person while getting nothing in return. There is an annual exclusion of $15000 and a lifetime exclusion of $11.4 Million while calculating the tax on the gifted amount. However, if the annual gift amount exceeds $15000, the person (i.e. the giver) has to file a gift tax return

In the present case, D has made his first taxable gift of $ 45,00,000.

  Gift Amount = $45,00,000

Less :   Annual Exclusion = $15000

Less : Liftime Exclusion = $ 44,85,000

Hence, there is no need for D to pay any gift tax.

However, Since the annual gift amount has exceeded $15000, D has to file a Gift tax return

  

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