A gift-splitting election

Question

Quizplus · Accepted Answer

A gift-splitting election allows spouses to combine their gift tax exclusions and apply them to gifts made from either spouse to third parties. This can reduce the amount of taxable gifts of the donor-decedent, ultimately reducing the estate tax on their estate after death. However, it does not result in a $7,500 per donee annual exclusion for each spouse (choice C) - that is the annual gift exclusion amount for single individuals. Additionally, the election is not binding on future years (choice D) - spouses can choose to make the election in some years and not in others. However, choice A is incorrect because a gift-splitting election does not require each spouse to give property - they can choose to split the gift amount however they wish.

A Gift-Splitting Election