Question

Tax Drill - Splitting Gifts

Cortez and Shelby are married and each made the following gifts in 2019:
Cortez:
• $20,000 to their son
• $30,000 to his mother

Shelby:
• $25,000 to their daughter
• $70,000 to Shelby's brother.

a. What is the amount of their taxable gifts assuming they do not elect to split gifts?
$

b. What is the amount of their taxable gifts assuming they elect to split gifts?

Answer 1

Answer -

a) $85,000

b) $40,000

If they do not elect to split gifts, the donor is allowed to have $15,000 exclusion for each donee. So computation will be as follows -

Donee Gross Gift Exclusion Taxable Gift
Son $20,000    ($15,000) $5,000
Mother $30,000 ($15,000) $15,000
Daughter $25,000 ($15,000) $10,000
Brother $70,000 ($15,000) $55,000
Total taxable gifts $85,000

If they do elect to split gifts, they are allowed to have $30,000 exclusion for each donee. So computation will be as follows
Donee Gross Gift Exclusion Taxable Gift
Son $20,000   ($30,000) $0
Mother $30,000 ($30,000) $0
Daughter $25,000 ($30,000) $0
Brother $70,000 ($30,000) $40,000
Total taxable gifts $40,000