Question

Kevin is considering making a substantial gift of stock to his fiancée Beth. The wedding is scheduled for September 10 of the current year. Kevin has already exhausted his united credit. He is also considering giving $28,000 cash this year to each of his three nephews. What tax issues should Kevin consider with respect to the gifts he is making to Beth and the nephews?

Answer 1

The general rule is that any gift is a taxable gift. However, there are exceptions to this rule. The following are nontaxable gifts:

• Gifts that do not exceed the annual exclusion for the calendar year,
• Tuition or medical expenses you paid directly to a medical or educational institution for someone,
• Gifts to your spouse
• Gifts to a political organization for its use, and
• Gifts to charities.

Sine Beth is not spouse, Kevin may wait till they marry and then show the giving of gift as IRS allows gift to spouse only and not fiancee.

Moreover, once they get married, the combined limit of Kevin and Beth would be $ 30000 in 2018, thus they can gift to the Nephews of Kevin by gift splitting and without attracting Goft Tax.

Hope this helps