Question

Which of the following is a complete taxable gift?

Multiple Choice

• $20,000 in cash contributed to the committee to reelect Senator BlowHard.

• $15,000 in cash given directly to Valley Hospital for the care of a neighbor who was in an auto accident.

• $18,000 in cash given directly to a needy student to pay for college tuition.

• $55,000 in cash transferred to a former spouse under a written property settlement shortly after a divorce.

• None of the choices is a complete taxable gift.

Answer 1

The Correct Answer is Option C i.e $18,000 in cash given directly to a needy student to pay for college tuition.

Explanation -

1. $20,000 in cash contributed to the committee to reelect Senator BlowHard. Political contributions are not considered as gratuitous transfers.
2. $15,000 in cash given directly to Valley Hospital for the care of a neighbor who was in an auto accident. As the payment is made to the health care provider it is excluded from taxable Gifts.
3. $55,000 in cash transferred to a former spouse under a written property settlement shortly after a divorce is not treated as gift but transfer for adequate consideration.