Basic Estate And Gift Tax Planning Practice Test

An individual taxpayer wants to start a gifting program in 2026 to benefit three adult children and two grandchildren. The taxpayer has not used any lifetime exemption to date. Assume the annual gift exclusion is $19,000 per donee, the lifetime exemption is $13,610,000, and the federal gift tax rate is 40% on taxable gifts in excess of available exemption. The taxpayer wants to maximize tax-free transfers each year without using any lifetime exemption. What is the most tax-efficient way to utilize the annual gift exclusion?

An individual taxpayer wants to make gifts in 2026 to two children and is deciding whether to gift on December 31, 2026 or January 1, 2027. The taxpayer plans to transfer $19,000 to each child and wants to maximize annual exclusions over time. Assume the annual gift exclusion is $19,000 per donee and the lifetime exemption is $13,610,000 with a 40% gift tax rate above it. What is the most tax-efficient way to utilize the annual gift exclusion?