Andrew and Brianna are married and live in Texas, a community-property state. For their birthdays this year Andrew gave cash gifts of $23,300 to each of his two daughters, and Brianna gave $38,400 to her niece. What is the amount of Andrew's taxable gifts?

Question

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In a community-property state like Texas, gifts are considered to be made equally by both spouses unless they elect to split gifts. Andrew's gifts to his daughters total $46,600, and Brianna's gift to her niece is $38,400. Each spouse can give $17,000 per recipient per year without incurring a gift tax. Andrew's taxable gift is $23,300 - $17,000 = $6,300 for each daughter, totaling $12,600. However, since the question asks for Andrew's taxable gifts, and assuming they do not elect to split gifts, Andrew's taxable gift is $4,200 ($23,300 - $17,000) for one daughter.

Andrew and Brianna Are Married and Live in Texas, a Community-Property