Question

2. John and his wife gave following gifts to their children, Harry and Jenny:

• $200,000 in 2016

• $150,000 in 2017

• $100,000 in 2018

  Calculate the value of the gift tax using the table below.

  The annual exclusion for 2016 & 2017 is $14,000 and for 2018 is $15,000; the lifetime estate and gift tax basic exclusion amount is 2016 in $5,450,000; 2017 in $5,490,000, and 2018 in 11,180,000. Calculate the value of the gift tax using the table below.

GIFT TAX CALCULATION
1. Total Current Year Gifts
2. Less Annual Exclusion
3. Total Current Year Taxable Gifts

4. Plus Taxable Gifts from Prior Years
5. Total Taxable Gifts
6. Tax on Total Taxable Gifts
7. Tax on Prior Gifts
8. Balance
9. Applicable Credit
10. Applicable Credit Against Tax for all Prior Periods
11. Balance (subtract 10 from 9)
12. Applicable Credit (smaller of 8 or 11)
13. Total Gift tax (8 minus 12)

Answer 1

As per given information, below will be the calculation for first 5 particulars.

1. Total Current Year Gifts		100000
2. Less Annual Exclusion		15000
3. Total Current Year Taxable Gifts		85000
4. Plus Taxable Gifts from Prior Years	200000+150000-(14000*2)	322000
5. Total Taxable Gifts		407000

All the steps after this will be null and void as if payee will avail the lifetime estate and gift tax basic exclusion.

Hence Total Gift Tax will be 0. Below will be calculation -

1. Total Current Year Gifts		100000
2. Less Annual Exclusion		15000
3. Total Current Year Taxable Gifts		85000
4. Plus Taxable Gifts from Prior Years	200000+150000-(14000*2)	322000
5. Total Taxable Gifts		407000
6. Lifetime estate & gift tax basic exclusion		1180000
7. Balance of Lifetime estate & gift tax basic exclusion		773000	6-5