Question

Which of the following items can reduce the cumulative gift tax? (Check all that apply.)

a) The annual exclusion

b) The lifetime exemption

c) The amount of gift tax paid on prior gifts

d) The amount of gift tax that is due on the current gift

Answer 1

The items that can reduce the cumulative gift tax are: the annual exclusion, the lifetime exemption, and the amount of gift tax paid on prior gifts.

Step-by-step explanation:

The items that can reduce the cumulative gift tax are:

1. The annual exclusion: This is a provision that allows you to give a certain amount of money or property to another person each year without it being subject to a gift tax.
2. The lifetime exemption: This is an amount that you can give away over your lifetime without paying gift tax. It is separate from the annual exclusion.
3. The amount of gift tax paid on prior gifts: If you have already paid gift tax on previous gifts, it can reduce the cumulative gift tax.