Final answer:
The correct answer is option B, which is $15,000. This is the annual exclusion limit for gift taxes according to the Tax Cuts and Jobs Act, which allows an individual to give this amount to each person without paying gift taxes or needing to report it to the IRS.
Step-by-step explanation:
The maximum yearly amount that an individual can give as a gift without incurring gift tax liability or having to report the gift to the IRS, according to the Tax Cuts and Jobs Act, is $15,000. Option B is the correct choice. This amount is called the annual exclusion and it applies to each person to whom you give a gift. Therefore, if you have three children and you give each child $15,000 in one year, you will not have to pay any gift tax, nor will you have to report the gifts to the IRS. It's important to note that this limit is per recipient, so an individual could give multiple gifts of up to $15,000 to different people in the same year without incurring a taxable event.
Gift taxes and estate taxes are closely related, as both are part of the IRS's way of ensuring that taxes are paid on large transfers of wealth. While the annual exclusion is set at $15,000 as of the current law, the lifetime exemption amount for the estate tax is much higher, ensuring that only a small portion of wealthy individuals will pay estate taxes on large inheritances.
In the context of an academic setting, understanding the implications of the gift tax is essential for topics related to finances, taxes, and estate planning. This understanding is relevant for business, law, and finance students at the college level, as well as for individuals managing personal wealth.