Gwyneth, who is subject to a 45% marginal gift tax rate, made a gift in 2009 of a sculpture to Jonathon, valuing the property at $150,000.The IRS later valued the gift at $350,000.The applicable undervaluation penalty is:

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The applicable undervaluation penalty is $18,000. The penalty is 20% of the difference between the value of the gift as determined by the IRS and the value of the gift as reported by the taxpayer. In this case, the difference is $350,000 - $150,000 = $200,000. The penalty is therefore 20% of $200,000 = $18,000.

Gwyneth, Who Is Subject to a 45% Marginal Gift Tax