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Richard, Tax Attorney
Category: Tax
Satisfied Customers: 55459
Experience:  29 years of experience as a tax, real estate, and business attorney.
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I am planning to set up a stock/bond fund for each of my children

Customer Question

I am planning to set up a stock/bond fund for each of my children (ages 16 and 20). I plan to transfer $50K from my savings into each of their account. The company warned be about Gift Tax. I just read up on IRS Form 709. This would result in total taxable gifts of $74K. Computed tax on it would be $16,640. Because I have no othertaxable gifts in any other years my maximum unified credit would be $1,730,800 and in completing for 709 it shows I would owe zero in tax from these gifts. Did I do this correctly or am I missing something? Thanks. XXXXX XXX-XXX-XXXX
Submitted: 5 years ago.
Category: Tax
Expert:  Richard replied 5 years ago.

Welcome! My goal is to do my very best to understand your situation and to provide a full and complete answer for you.

Good afternoon. Actually, the lifetime exemption (which has taken the place of the unified credit) for 2012 is $5,000,000. So, you can give the first $13,000 to each child under the annual gift exclusion. And, then the remaining $37,000 to each child would be reported on the gift tax return to show how much of the lifetime exemption you are using. In any event, there would be no gift tax due.

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