Estate and Gift Taxation: Transfers Subject to the Gift Tax

Question 1

What Gifts are not subject to federal tax

Answer 1

1) Medical care payments on another’s behalf paid directly to medical care provider
2) Tuition payments made to an educational organization (for example, a university)
3) Transfers to political organizations

All other transfers over $14,000 per donee, per year are subject to gift tax (the unified transfer tax)

Question 2

The gift tax return (IRS Form 709)

Answer 2

is filed on a calendar-year basis, and the due date for filing the return and paying the tax is April 15 after the calendar year-end of the gift

Question 3

The cash transfer is a present interest

Answer 3

if the recipient has immediate control and enjoyment of the gift

Question 4

n order to keep families from avoiding the federal gift and estate tax (called the unified transfer tax) by passing wealth to younger generations (for example, the father would pass wealth directly to his great-grandchild)

Answer 4

the Internal Revenue Code imposes an additional generation-skipping transfer tax (GSTT).

Question 5

The GSTT

Answer 5

applies to lifetime transfers by gifts made after September 25, 1985, and to transfers by death occurring after October 22, 1986.

The GSTT applies to gifts made to descendants two or more generations below the donor’s generation

Question 6

Income interest would not be a completed gift at the trust’s creation

Answer 6

if the grantor retained the power to revoke the trust