ea_rva aka acctgtaxmatters
Level 5
‎05-13-2021 01:24 PM

75 year old Father, filing status single, gifts $40,000 to daughter to help with business acquisition she is purchasing. I've concluded gift tax return is necessary. When I create 709, it shows no tax owed. Under Part 2 Tax Computation:

Line 3 Total taxable gifts = $25,000

Line 4 computed tax = $4,900

Line 7 Applicable credit amount = $4,577,800

Line 12 Applicable credit = $4,900

Line 18 balance due = $0

What am  I doing wrong?

 

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sjrcpa
Level 15
‎05-13-2021 01:33 PM

Why would gift tax be owed if client has not used their lifetime exemption of $11+  million?


Ex-AllStar

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Terry53029
Level 14
Level 14
‎05-13-2021 01:41 PM

Nothing ! As of 2020 the lifetime exclusion is $11580

ea_rva aka acctgtaxmatters
Level 5
‎05-13-2021 01:48 PM

Gotcha! First time doing one. So why is the $4,577,800 "applicable credit" not showing as $11,580,000?

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TaxGuyBill
Level 15
‎05-13-2021 09:22 PM

The "credit" is that amount.  That is the exclusion limit ($11+million) multiplied by the Gift Tax Rate (40%?).