Gift Tax 709

Question 1

Finella sold a plot of farm land to her son, Alastair, for $250,000. At the time of the sale, the land’s fair market value was $380,000, and Finella’s adjusted basis was $195,000. What amount(s) should Finella report on her tax return(s) for this transaction?

Answer 1

$55,000 capital gain; $130,000 gift. A gift tax return would be required.

Finella must report a capital gain of $55,000 ($250,000 - $195,000).
She must also file a gift tax return (Form 709), because she has made a gift of $130,000 ($380,000 - $250,000),
since she sold the property for much less than the fair market value.

Question 2

Sophia and Ralph are married and file jointly. Sophia gives her cousin, Elijah, $24,000 in cash as a Christmas present in 2023. Sophia elects to split the gift with her husband, Ralph. What is their filing requirement for this split gift?

Answer 2

The entire gift is tax free. However, a gift tax return is required.
A split gift is reportable.

Question 3

Gerald is wealthy and likes to help his favorite grandson, Paul. Which of the following payments made in 2023 on Paul’s behalf might be subject to the generation-skipping tax (GST)?

Answer 3

. Payment of Paul’s student loans directly to the lender. The generation-skipping tax (GST) can be incurred when grandparents directly transfer money or give property to their grandchildren

Question 4

Draco gives his daughter, Camille, 20 shares of stock in ABC Corporation. At the time of the gift, the FMV of the shares is $900. Draco had an adjusted basis in the stock of $500 at the time of the gift. Camille sells the stock two months later for $975. What is Camille’s basis in the stock, for the determination of gain?

Answer 4

A. $500
Camille’s basis in the stock is $500. For purposes of determining gain, the taxpayer will generally take a “transferred basis” when they receive property as a gift. This means that Camille’s basis in the property is the same as her father’s basis in the property.

Question 5

Which of the following statements regarding the generation-skipping transfer tax is true?

Answer 5

Edwin gave the money to his grandson, thereby ‘skipping’ his own son or daughter (Todd’s father or mother). Because of the skip, and since none of the exceptions to the gift tax apply; this transaction is subject to both gift and generation-skipping transfer taxes. The facts are the same, even if the gift is made to a trust.

Question 6

Which of the following entities are required to file Form 709, United States Gift Tax Return?

Answer 6

Only individuals are required to file gift tax returns. If a trust, estate, partnership, or corporation makes a gift, the individual beneficiaries, partners, or stockholders are considered donors and may be liable for the gift and GST taxes.

Question 7

John made the following transfers during 2023:

To his neighbor in the amount of $20,000
To his nephew in the amount of $18,000
To his uncle in the amount of $17,000

All of the transfers are gifts that qualify for the annual exclusion. What is the total annual exclusion amount for gifts listed on John’s Form 709?

Answer 7

Since each gift is made to a different person, the annual exclusion amount is allowed for each gift. Reported on John’s Form 709 are total reportable gifts of $38,000 ($20,000 to neighbor + $18,000 to nephew), total annual exclusions of $34,000 ($17,000 annual exclusion for 2023 × 2 people), and total taxable gifts of $4,000.

Question 8

Which estate would be required to file Form 1041?

Answer 8

the filing requirement hinges on the existence of income-producing assets or nonresident alien beneficiaries, not a specific income threshold.

Question 9

For the calendar year 20X1, if a gift tax return is required to be filed and the donor is NOT deceased, what is the due date of the return excluding extensions?

Within 75 days of making the gift
On or before December 31, 20X1
No earlier than January 1, 20X2 and no later than April 15, 20X2
Within 180 days of making the gift

Answer 9

For donors still living at the time of the granting of the gift in 20X1, the Form 709 cannot be filed before January 1, 20X2 and must be filed not later than April 15, 20X2. There are special rules for calculating the due date for a gift tax return if the donor is deceased.

Question 10

There are special rules for calculating the due date for a gift tax return if the donor is deceased.

Answer 10

[1]: https://www.irs.gov/instructions/i709 “”
[2]: https://www.law.cornell.edu/cfr/text/26/25.6075-1 “”
[3]: https://www.canada.ca/en/revenue-agency/services/tax/individuals/life-events/doing-taxes-someone-died/prepare-returns/credits-deductions/donations-gifts.html “”
[4]: https://www.irs.gov/businesses/small-businesses-self-employed/filing-estate-and-gift-tax-returns “”

Certainly! When a donor is deceased, there are specific rules for calculating the due date of a gift tax return (Form 709). Let’s break it down:

1. General Rule:
   
   • Normally, gift tax returns are due on April 15 following the year in which the gift was made.
   • However, if the donor passed away during the year, the due date changes.
2. Exception for Deceased Donors:
   
   • If the donor died during the year, the executor (or personal representative) must file the donor’s gift tax return (Form 709) by the earlier of:
     
     • The due date (including extensions) for filing the donor’s estate tax return (Form 706).
     • April 15 of the year following the gift tax year (or the extended due date granted for filing the donor’s gift tax return).
3. Example:
   
   • Suppose the donor passed away in 2023.
   • The gift tax return for gifts made during 2023 must be filed by the earlier of:
     
     • The due date for filing the donor’s estate tax return (if applicable).
     • April 15, 2024, or any extended due date granted for filing the donor’s gift tax return.

In summary, the due date for a gift tax return when the donor is deceased depends on the timing of the donor’s passing and the estate tax return deadline. Executors must ensure timely filing to comply with IRS requirements. 📝💰

Question 11

Gail, who is married, gave a guitar signed by Elvis Presley’s barber worth $50,000 to her brother, Ron. Gail’s basis in the guitar is $20,000. What amount will Gail report as the value of the gift on Form 709?

$20,000
$30,000
$50,000
$40,000

Answer 11

Gail must initially report the full value of the gift, $50,000, on her Form 709 gift tax return. She can use the gift tax annual exclusion to reduce the taxable. Her basis in the gift does not affect the amount she must report as the value of the gift.

Question 12

In 2023, Mary gave several gifts to relatives. Which of the following gifts must be reported in an annual gift tax return?
$25,000 to her mother to help pay for medical expenses
A $20,000 Federal tax-exempt municipal bond to her sister
100 shares of stock to her daughter (Mary’s basis in the stock was $10,000 and the fair market value at the date of gift was $20,000)
$20,000 to a qualified university for her son’s dormitory fees
2 and 4 only
2, 3, and 4 only
3 only
1, 2, 3, and 4

Answer 12

The value of a gift on Form 709 is the FMV on the date of the gift and does not take into account any basis, therefore, the stock to her daughter is reported as $20,000.

Question 13

the value of the Gross Estate, which does not consider the ________ ________

Answer 13

This question is asking for the value of the Gross Estate, which does not consider the estate expenses.