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Steven’s gift tax liability for 2013 - Assignment Example
Steven’s gift tax liability amounts to $10,000; however, this amount is offset by the lifetime gift exemption (Hoffman, Raabe and James 847). In this case, Steven is not subject to any gift taxes in 2013, but reduces his lifetime gift exemption by $10,000…
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. Second, he did not contribute the car to a political organization or for charity use. Third, it was not used to fund tuition or medical expenses and lastly it surpassed the year exclusion limit thus making it liable for gift tax (IRS). ...