Gift Tax

Question 1

Advantages of Making Lifetime Gifts

Answer 1

Seeing the money used by loved ones
Use of annual exclusion
-$17,000 per year, per person
Post gift appreciation out of estate
Post gift income out of estate
Shifting of income:
-Recipients are often in a lower personal income tax bracket
No gross-up on taxable gifts:
-Tax calculated on gift only, not total property removed from estate

Question 2

Present Interest for Annual Exclusion

Answer 2

$17,000 exclusion when gift is of a present interest

Question 3

Qualified Transfer

Answer 3

Medical Expenses
Tuition Expenses
-must be paid directly to the service provider
-no relationship need exist between parties
-unlimited in amount
-over and above the annual exclusion

Question 4

Unlimited Marital Deduction

Answer 4

Transfers to a US Citizen spouse that qualify for the marital deduction
Transfers to a qualified US charitable organization

Question 5

Unlimited Charitable Deduction

Answer 5

Transfers to a qualified US charitable organization

Question 6

Filing Requirements for 709 Gift Tax Return

Answer 6

-Filed by the person making the gift
-The return is due annually, by April 15 of the year following the gift
-If the donor dies, the return is due with the estate tax return if that is sooner than April 15 and it is filed by the executor