The purchase of a $20,000 engagement ring generates a taxable gift necessitating the filing of a gift tax return.

Question

Quizplus · Accepted Answer

The purchase of an engagement ring for $20,000 constitutes a gift, and because it exceeds the annual exclusion amount ($15,000 in 2021), it triggers the need for the donor to file a gift tax return. However, it does not necessarily mean that the donor will owe any gift tax, as they can use their lifetime gift and estate tax exemption to cover the amount that exceeds the annual exclusion.

The Purchase of a $20,000 Engagement Ring Generates a Taxable