Course: Income Tax Planning
Lesson 5: Gross Income Exclusions
In the Gifts & Inheritance section of Income Tax Planning and, how come there is not mention of the $15,000 gift tax limit. All it says is that gifts can be excluded from Gross Income. The amount of gifts excluded from taxable income is limited, correct?
Thanks for that question Craig.
We have to be careful to keep all of our taxes separate, especially on CFP Board questions.
A donee’s receipt of a gift or an inheritance is not subject to income tax. There is no limit. Your kindly rich aunt could give you $10,000,000 and nothing would be included in your gross income.
The annual exclusion amount for taxable gifts and the unified applicable exclusion amount for gifts and testamentary transfers deal with transfer taxes such gift tax, estate tax, and the generation skipping transfer tax.
Let me know if you have any additional questions on this.