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Phil Anthropy wrote his cousin a $15,000 check to pay for medical bills the cousin had accumulated. He also distributed $5,000 checks to three nephews who were in college, and gave his mother a check for $12,000.
Have Phil's actions triggered any gift taxes?
Suggested Answer: B
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Yes. If Phil gives his cousin a $15,000 check, three nephews $5,000 checks, and his mother a check for $12,000, $2,000 of his total distributions is subject to the gift tax. The current annual gift tax exclusion is $13,000 per person, and he has exceeded that by $2,000 with the check he wrote to his cousin. Had Phil written the check directly to his cousin's medical care provider, no gift taxes would have been due on any of that amount either.
30 comments · newest first
RE
Ressie
11 months ago
Agree with A, those amounts definitely trigger gift tax.
DO
Donette
11 months ago
I think option A is correct, that’s a lot of money!
EA
Earleen
11 months ago
Wait, are you sure none of it is tax-free? Sounds off.
RO
Rosalyn
11 months ago
Isn’t there a lifetime exclusion that might apply here?
RE
Regenia
11 months ago
Phil's total gifts are over the annual exclusion limit.
WY
Wynell
12 months ago
I feel like the $12,000 to his mom might not count, but I can't remember if there's a special rule for family members.
VI
Viva
12 months ago
I'm not entirely sure, but I think the total gifts add up to more than the exclusion, so there might be some tax due.
TR
Tresa
1 year ago
I remember a practice question where we had to calculate the total gifts and see if they exceeded the exclusion limit. This feels similar.
EV
Evelynn
1 year ago
I think the annual gift tax exclusion is $15,000, so maybe only the amount over that is taxable?
FR
Fredric
1 year ago
I've got a strategy here. First, I'll calculate the total amount of the distributions. Then, I'll see how much of that falls under the annual exclusion and lifetime exemption. That should give me the answer.
CA
Catherin
1 year ago
I'm a bit confused on this one. The question mentions "any gift taxes," so I'm not sure if that means any amount over the annual exclusion or something else. I'll need to double-check the gift tax rules.
CA
Casandra
1 year ago
Okay, let's see. The total distributions are $15,000 + $5,000 x 3 + $12,000 = $37,000. I think the key is figuring out how much of that is subject to the gift tax.
DU
Dudley
1 year ago
Hmm, this seems like a tricky gift tax question. I'll need to carefully review the details and think through the annual exclusion and lifetime exemption rules.
LE
Lenna
1 year ago
I'm leaning towards option A as well, $19,000 seems like a reasonable amount.
LA
Lashanda
1 year ago
I think it's possible that only $2,000 of his distributions is subject to the tax.
AM
Amie
1 year ago
I believe $19,000 of his total distributions is subject to the gift tax.
PA
Pamella
1 year ago
I agree, but I'm not sure how much of it is subject to the tax.
ON
Onita
1 year ago
I'm going with B. $2,000 of his total distributions is subject to the gift tax. The $12,000 check to his mother exceeds the annual exclusion, so that portion would be taxable.
LE
Lenna
1 year ago
I think Phil might have triggered gift taxes.
LA
Lavonna
1 year ago
Hmm, I'm not sure about this one. Maybe I should have paid more attention in my tax law class. *chuckles*
SI
Sina
1 year ago
A) Yes, $19,000 of his total distributions is subject to the gift tax.
TA
Tamekia
1 year ago
D seems like the right answer to me. None of Phil's distributions are subject to the gift tax since they're all below the annual exclusion amount.
MA
Marjory
1 year ago
D seems like the right answer to me. None of Phil's distributions are subject to the gift tax since they're all below the annual exclusion amount.
AL
Alisha
1 year ago
A) Yes, $19,000 of his total distributions is subject to the gift tax.
CO
Coral
1 year ago
I think the answer is C. $7,000 in distributions is subject to the gift tax. The annual gift tax exclusion is $16,000 per recipient, so the $15,000 check to his cousin and the three $5,000 checks to his nephews are all exempt from the gift tax.
MA
Malinda
1 year ago
No. None of Phil's distributions is subject to the gift tax.
LA
Lanie
1 year ago
Oh, I see. Thanks for clarifying that!
JO
Jolene
1 year ago
Actually, the correct answer is A. Yes, $19,000 of his total distributions is subject to the gift tax.
DE
Delisa
1 year ago
I think the answer is C. $7,000 in distributions is subject to the gift tax.
GA
Galen
1 year ago
I think the answer is C. $7,000 in distributions is subject to the gift tax.