Gift Tax Formula

Question 1

Gift tax formula

Answer 1

1. Total gifts in current year (FMV of all gifts)
2. – Total subtractions
3. = Taxable gifts in current year
4. • Post-1976 taxable gifts made in prior years
5. = Total taxable gifts to date (tax base)
6. Tentative tax on total taxable gifts to date
7. – Tax deemed paid on prior taxable gifts
8. = Gift tax on current-year taxable gifts before applicable credit amount
9. – Applicable credit amount
10. = Gift tax due on current-year taxable gift

Question 2

Total subtractions

Answer 2

1. One-half the value of gifts split with spouse
2. Annual exclusions ($15,000 per donee in 2019)
3. Marital deduction (can be unlimited if spouse is a U.S. citizen)
4. Charitable deduction (can be unlimited)