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CaC Cathy, who is single, makes gifts of $50,000 to each of her two adult children. I:1-7 a. Who is primarily liable for the gift tax on the two gifts, Cathy or the two children? b. If Cathy has never made a taxable gift in prior years, is a gift tax due on the two gifts?
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Answer #1

A) cathy is primarily liable for gift tax

Explanation:

The donor is primarily liable for the gift tax. If the donor fails to pay the gift tax, then the donee will be responsible for that tax.

The donor, Cathy , is primarily liable for the gift tax on the two gifts. If the donor, Cathy, fails to pay the gift tax, then the donee, two adult children, will be liable for the payment.

B) Yes, a gift tax must be considered on the two gifts. She is permitted a $14,000 annual exclusion for gifts of a present interest to each donee. Since Cathy has never made a taxable gift, no gift tax will be due because of the unified credit that is available to her as she has not made a taxable gift in prior years.

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