Identify which of the following statements is true.
A)A taxable gift may occur when property is sold in an arm's length transaction for less than its FMV.
B)An individual can inadvertently make a gift by underestimating a property's fair market value and selling it to a relative for a price below its fair market value.
C)The statutory exemption from the gift tax for payments for medical care requires that the payment be made for a relative.
D)All of the above are false.

Question

Quizplus · Accepted Answer

Statement B is true. A taxable gift may occur when property is sold in an arm's length transaction for less than its FMV, but it is not inadvertent. The statutory exemption for payments for medical care does not require that the payment be made for a relative.

Identify Which of the Following Statements Is True