Jayden gave Olivia a ring when she agreed to marry him. The ring is a family heirloom valued at $34,750. What is the amount of the taxable gift?

Question

Quizplus · Accepted Answer

The amount of the taxable gift is the fair market value of the ring ($34,750) minus the annual gift tax exclusion amount ($15,000 for 2021), which comes out to be $19,750. The marital deduction does not apply until Jayden and Olivia are married, so option A is incorrect. Option D is incorrect because although the transfer may not be gratuitous, it still qualifies as a gift for tax purposes. Option E is incorrect because one of the choices is correct.

Jayden Gave Olivia a Ring When She Agreed to Marry