[vanessa000abc]

Becker R4-61 D

states” a $2,081,800 unified estate and gift tax credit exempts from gift tax cumulative,nonexcluded gifts having a value of $5,340,000.

what do these two numbers mean? any relations between these two numbers? My understanding is that if you take the credit $2,081,000, then you can take the $5,340,000 exclusion.Am I right?

I need your inputs. Thanks.

[win2bet]

Credit means it is against a tax liability, and exclusion means it is against the taxable base.

So you can basically gift some1 5,340,000 in your lifetime without ANY gift tax, if there was a tax on 5,340,000 the tax would be 2,081,000 where the credit would simply wipe it out.

They are basically the same thing in a sense

REG 68,87
BEC 85
FAR 75
AUD 64,64, 86!

[vanessa000abc]

Thanks, win2betmore.

Your explanation really helps! One more question, if a person gifted his son 15,000 per year for year 1 and year 2, and on year 3, he died. so only 1000*2 showing on Form 709 but sine 2000 is less 5,340,000 , he won't be taxed, right?

[win2bet]

year 1 and year 2 would have 1000 on form 709, which would reduce the 5,340,000 number

then when he died the 706 would have to be filed, but yea he wouldn't be taxed, since 2000 is smaller then 5,340,000

REG 68,87
BEC 85
FAR 75
AUD 64,64, 86!

[Mika]

win2betmore:

https://wills.about.com/od/understandingestatetaxes/qt/Gift-Tax-Exclusion-Annual-Exclusion-Vs-Lifetime-Exemption.htm

Please take a look if you have time

A good example from the article

What Happens if You Make a Taxable Gift?

What happens if during the course of 2014 you make a total of $120,000 in gifts to your daughter? Then you will have made a taxable gift to your daughter equal to $106,000:

$120,000 in gifts reduced by the $14,000 annual gift exclusion equals $106,000 in taxable gifts.

In turn, the $106,000 in taxable gifts will reduce your 2014 $5,340,000 lifetime gift tax exemption down to $5,234,000:

$5,340,000 lifetime gift tax exemption reduced by $106,000 in taxable gifts equals $5,234,000 of lifetime gift tax exemption remaining.

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[vanessa000abc]

but as I was digging into the Form 709, it seemed like we need to pay gift tax for over $14,000 per donee. Please see R4-78 line 20.

[georlai]

Base on win2betmore theory, could someone analyze my case

---

I have 6M left to my son.

Therefore, 6M-14,000(nontaxable)-5.34M(life time exclusion)= 646,000

And assumed the death tax rate is 40%, than

646,000*0.4=258,400

Since I also have the unified tax credit 2,081,800, which is more than enough to wipe off 258,400

Therefore, my son doesn't own the tax in this case.

[Last Chance CPA]

@win2betmore – I want to know the answer to georlai's question as well, but also wanted to know how you jumped your score in REG? I have 66, 62, 65 to my name and it sucks!

FAR - 76
AUD - 75
BEC - 75
REG - 76

Now I need some experience!!! And some networking...

[Author]

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