Stacey inherits unimproved land (fair market value of $6 million)from her father on June 1,2011.Stacey disclaims her interest in the property as follows: one-third on December 1,2011;one-third on January 3,2012;and the remaining one-third on May 31,2012.In all cases,the disclaimers pass the interest to her son (the next heir under state law).The Federal gift tax applies to Stacey for:

Question

Quizplus · Accepted Answer

Under the federal gift tax rules, a disclaimer is treated as a gift from the disclaimant to the person who receives the disclaimed property. However, if the disclaimer meets certain requirements, it can be treated as if the disclaimant never had an interest in the property for gift and estate tax purposes.

In this case, Stacey's disclaimer on May 31, 2012, is the only one that could potentially trigger gift tax. The reason is that the fair market value of the property at the time of the disclaimer ($2 million) exceeds the annual gift tax exclusion amount for that year ($13,000), so this gift would be taxable.

The earlier disclaimers in 2011 and 2012 do not trigger gift tax because their value is below the annual exclusion amount. Therefore, the correct answer is C) The May 31, 2012 disclaimer.

Stacey Inherits Unimproved Land (Fair Market Value of $6 Million)from