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Institution Name Course Instructor Date Question 1 Part 1: Steven’s gift tax liability for 2013 Gifts given: Fur Coat to Allie = $10,000 (less than annual exclusion of $14,000) Car to Bobby = $18,000 = 18000 – 14000 = $4,000 (taxable) Cash to Carla = $20,000 = 20000 – 14000 = $6,000 (taxable) Total gift tax liability = 6000 + 4000 = $10,000 Lifetime gift tax exemption = $5,250,000 Less gift tax due = 5250000 – 10000 = $5,240,000 Steven’s gift tax liability amounts to $10,000; however, this amount is offset by the lifetime gift exemption (Hoffman, Raabe and James 847)…
Carla and Bobby’s gifts accrued a tax liability of $10,000. On a personal opinion, Steven could have minimized or eliminated this gift tax liability by considering, giving the gift as joint property with his wife. The IRS considers gifts given by couples jointly, to be divided into half of the total value of the gift, such that each individual ends up giving half (Herisgad). From this point, each half is dealt with individually, subject to gift tax guidelines. If Steven, had given the car to Bobby jointly with his wife then it would have been total value $18,000 divided by two from each thus from Father $9,000 and Mother $9,000 of which both amounts do not reach the annual exclusion of $14,000 or $28,000 if put together. Same with Carla, the $20,000 gift if given jointly it will be subject to a $28,000 exclusion thus not tax liability. Part 3: The basis of any property that you believe Steven gifted Steven gifted his son Bobby with a car that was worth $18,000. This is considered a taxable gift following reasons. First, Steven did not give it to his spouse. ...
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