In the current year, Cesar, who is single, gives $26,000 to each of his 20 nieces and nephews for a total property transfer of $520,000. Cesar's taxable gifts total
A)$520,000.
B)$260,000.
C)$300,000.
D)$220,000.

Question

Quizplus · Accepted Answer

Cesar's taxable gifts total $220,000 after applying the annual exclusion. For the current year, the annual gift tax exclusion allows an individual to give up to $16,000 to any number of people without incurring any gift tax or using any of the lifetime gift tax exemption. Since Cesar gave $26,000 to each of his 20 nieces and nephews, the first $16,000 of each gift is excluded from the taxable amount. This means $10,000 per gift is taxable, resulting in a total of $200,000 ($10,000 x 20) in taxable gifts. However, the correct calculation should consider the total amount given ($520,000) minus the excluded amount ($320,000; $16,000 x 20), which actually results in $200,000 in taxable gifts. The correct answer should reflect the calculation based on the annual exclusion, but it seems there was a mistake in the explanation regarding the final taxable amount. The principle of applying the annual exclusion is correct, but the final taxable amount provided does not match the calculation described.

In the Current Year, Cesar, Who Is Single, Gives $26,000