Question

The Daltons live in Missouri, a separate property state. Here are the gifts they made during 2019 and compare the taxable gift amounts with and without the election of gift splitting.

	Mr. Dalton	Mrs. Dalton
Donee 1	$25,000	$5,000
Donee 2	$50,000	$0
Donee 3	$16,000	$9,000

Without gift splitting, what is the total taxable gift for the household?

A. $46,000

B. $90,000

C. $45,000

D. $30,000

Answer 1

$15,000 is an annual limit for non taxable gifts, it means taxpayer can give gifts upto $15,000 per person without incurring any tax liability. The annual gift exclusion is $15,000 for the 2019 tax year. This is the amount of money one can gift to a person annually without incurring gift tax.

With gift splitting, the annual limit for gift exclusion is $30,000($15,000 + $15,000 for spouse)

Calculation of Total Taxable gift for Mr. Dalton without gift splitting :

Donee 1 = $25,000 - $15,000 = $10,000

Donee 2 = $50,000 - $15,000 = $35,000

Donee 3 = $16,000 - $15,000 = $1,000

Total taxable gift for Mr Dalton = $10,000 + $35,000 + $1,000 = $46,000

Total taxable gift for Mrs Dalton is $0 as she did not pay gift exceeding $15,000 to any donee.

Total Taxable gift for the household without gift splitting = $46,000 + $0 = $46,000

Answer is A. $46,000