Joy receives a used car worth $13,000 from her uncle as a graduation present. As a result of the gift
I.Joy will have $13,000 of taxable income.
II.Joy's uncle's gift will subject him to the gift tax.

Question

Joy receives a used car worth $13,000 from her uncle as a graduation present. As a result of the gift
I.Joy will have $13,000 of taxable income.
II.Joy's uncle's gift will subject him to the gift tax.
​

Quizplus · Accepted Answer

Statement I is incorrect as gifts are generally not taxable income to the recipient. Statement II is also incorrect as the gift tax is typically paid by the donor, not the recipient. However, there are gift tax exemptions and exclusions which may apply, depending on the value of the gift and the donor's total lifetime gifts.

Joy Receives a Used Car Worth $13,000 from Her Uncle