Question

Ginny made the following gifts during 2018. Her husband, Ken, made no gifts during the year.

• Gift of land valued at $250,000 to her husband
• Gift of $20,000 in stock to her daughter
• Gift of $32,000 to her sister to pay for medical expenses

a. How much are Ginny’s taxable gifts if gift splitting is not elected?

b. How much are Ginny’s taxable gifts if gift splitting is elected?

Answer 1

ANSWER

a) $22,000

b) $2,000

Workings:

Gift of land valued at $250,000 to her husband, tax exempt as Gifts from one spouse to the other spouse is gift-tax exempt.

Annual gift tax exclusion amount for 2018 is $15,000

a)

If splitting is not elected:

Gift of $20,000 in stock to her daughter: Taxable gift = $20,000 - $15,000 =$5,000

Gift of $32,000 to her sister to pay for medical expenses: Taxable gift = $32,000 - $15,000 =$17,000

Total taxable gift = $5,000 + $17000 = $22,000

Hence,

if splitting is not elected, Ginny’s taxable gifts = $22,000

b)

If splitting is elected:

for Ginny and Ken the annual exclusion amount effectively is = $15,000 * 2 = $30,000

Gift of $20,000 in stock to her daughter: Taxable gift = $0 as gift amount is below $30,000

Gift of $32,000 to her sister to pay for medical expenses: Taxable gift = $32,000 - $30,000 = $2,000

Hence,

if splitting is elected,Ginny’s taxable gifts = $2,000

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