Bernie is single and has never made any prior gifts. In 2020, he makes the following gifts of cash: $115,000 to Donald; $15,000 to Elizabeth; $5,000 to Amy; $20,000 to Donald; and $25,000 to EKU. What is the amount of the taxable gifts made by Bernie?     $180,000     $115,000     $105,000     Zero

SWFT Individual Income Taxes
43rd Edition
ISBN:9780357391365
Author:YOUNG
Publisher:YOUNG
Chapter14: Property Transactions: Determination Of Gain Or Loss And Basis Considerations
Section: Chapter Questions
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Question 11

  1. Bernie is single and has never made any prior gifts. In 2020, he makes the following gifts of cash: $115,000 to Donald; $15,000 to Elizabeth; $5,000 to Amy; $20,000 to Donald; and $25,000 to EKU. What is the amount of the taxable gifts made by Bernie?
       
    $180,000
       
    $115,000
       
    $105,000
       
    Zero

 

Question 12

  1. The purpose of the "Crummey Clause" is to convert a gift to a trust from a future interest to a present interest by giving a trust beneficiary the right to withdraw the gift from the trust.
       
    True
       
    False

 

Question 13

  1. Bob died in 2020. He left an estate worth $20,000,000, a surviving spouse, and a two trust will which creates a marital trust and a credit shelter trust, how much property should go into each trust to minimize the estate taxes at Bob's death and at the death of the surviving spouse?
       
    $10,000,000 into each trust.
       
    $20,000,000 into the marital trust and nothing into the credit shelter trust.
       
    Approximately $11,500,000 into the marital trust and approximately $4,500,000 into the credit shelter trust.
       
    Approximately $11,500,000 into the credit shelter trust and the balance of the estate into the marital trust.
Expert Solution
Step 1

As per the Provision in US, IRS allows every tax payer to give gifts upto the value of 15000 to individual recipient in one years and thereis no limit on such recipient you want to give gift, it means we can gift up to 15000 to one individual for any number of individual, if we have gift two different person a sum of 15000 each the as per rules taxpayer can take benefit upto 15000 x 2 = 30000.

If the amount of gift given to taxpayer is below 15000 then whole amount is exempt.

In the given question there is a person names Donald, we are assuming that these are two different person.

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