A provision allowing a married couple to treat a gift made by one of them to a third party as having been made one-half by each, provided it is consented to by the other on a Gift Tax return.

A provision allowing a married couple to treat a gift made by one of them to a third party as having been made one-half by each, provided it is consented to by the other on a Gift Tax return.

• A. Gift Tax
• B. Joint Tenancy
• C. Life Interest
• D. Gift Splitting

Answer: (D)

Gift splitting lets a married couple treat a gift made by one spouse to a third party as if both spouses gave half, provided the other spouse consents on the Gift Tax return. This consent is shown on Form 709 for the year. By electing to split, the gift is eligible for both spouses’ annual exclusions, effectively doubling the amount that can pass tax-free to that recipient in that year. For example, with an annual exclusion of 17,000, a 25,000 gift can be fully excluded if both spouses agree to split the gift. If the gift exceeds what the two annual exclusions cover, the excess uses up the donors’ lifetime exemption or is taxed. This option does not create a joint tenancy or life interest; it’s a reporting method to share the gift for tax purposes. That’s why the correct term for this provision is gift splitting.

Gift splitting lets a married couple treat a gift made by one spouse to a third party as if both spouses gave half, provided the other spouse consents on the Gift Tax return. This consent is shown on Form 709 for the year. By electing to split, the gift is eligible for both spouses’ annual exclusions, effectively doubling the amount that can pass tax-free to that recipient in that year. For example, with an annual exclusion of 17,000, a 25,000 gift can be fully excluded if both spouses agree to split the gift. If the gift exceeds what the two annual exclusions cover, the excess uses up the donors’ lifetime exemption or is taxed. This option does not create a joint tenancy or life interest; it’s a reporting method to share the gift for tax purposes. That’s why the correct term for this provision is gift splitting.