In 2012 X made the following cash transfers: To wife $\mathrm { W } \quad\quad \$ 90,000$
To son $\mathrm { M } \quad\quad 30,000$
To daughter $\mathrm { N } \quad\quad 8,000$
To irrevocable trust for grandchild O $\quad200,000$ Under the terms of the trust, all accumulated income and the trust assets will be distributed to O on her 23rd birthday.Based on these facts, if X and M elect gift splitting, X's taxable gifts total

Question

Quizplus · Accepted Answer

Gift splitting allows spouses to treat gifts as if they were made half by each, effectively doubling the annual exclusion. In 2012, the annual exclusion was $13,000 per recipient. The taxable gifts are calculated as follows:  - To wife W: $90,000 (not taxable as gifts to spouses are not subject to gift tax)  - To son M: $30,000 - $13,000 (annual exclusion) = $17,000  - To daughter N: $8,000 - $13,000 (annual exclusion) = $0 (no taxable gift)  - To trust for grandchild O: $200,000 - $13,000 (annual exclusion) = $187,000  Total taxable gifts = $17,000 + $187,000 = $204,000.  With gift splitting, each spouse is considered to have given $102,000. Thus, X's taxable gifts total $102,000.

In 2012 X Made the Following Cash Transfers: to Wife W$90,000\mathrm { W } \quad\quad \$ 90,000W$90,000

In 2012 X Made the Following Cash Transfers: to Wife $\mathrm { W } \quad\quad \$ 90,000$