Question 1

A married couple agrees to 'gift split' for all gifts made in Year 1. Spouse A gifts $56,000 to their niece. Spouse B gifts $10,000 to the same niece. Assume the annual exclusion is $18,000. What is the total amount of taxable gifts for Spouse A in Year 1?

Accepted Answer

1. Sum all gifts to the donee ($56k + $10k = $66k). 2. Split in half ($33k each). 3. Subtract annual exclusion from each half ($33k - $18k = $15k).

Question 2

What mistakes do candidates make on this CPA question?

Accepted Answer

Only splitting Spouse A's gift and ignoring Spouse B's gift to the same person.

A married couple agrees to 'gift split' for all gifts made in Year 1. Spouse A gifts $56,000 to their niece. Spouse B gifts $10,000 to the same niece. Assume the annual exclusion is $18,000. What is the total amount of taxable gifts for Spouse A in Year 1?

How to approach this question

Full Answer

Common mistakes

Practice the full CPA TCP Practice Exam 4

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