Question

Upon her​ grandmother's death,​ So-hyun received​ $100,000 to use for college expenses or for starting her family. The money is in a checking account for Sohyun to use as she chooses. How much tax does​ So-hyun own on the gift from her ​grandmother?

Answer 1

So-hyun does not owe any tax on the $100,000 gift from her grandmother, as the responsibility for gift taxes usually falls on the donor and there are annual and lifetime exemptions that likely apply.

Step-by-step explanation:

The question revolves around the tax implications for So-hyun upon receiving a $100,000 gift from her grandmother. According to the current tax laws in the United States, gift recipients are generally not responsible for paying income tax on the gifts they receive. Instead, the responsibility for paying any applicable taxes on gifts typically falls to the donor. As of the knowledge cutoff date in 2023, individuals can give up to $16,000 per year, per recipient without incurring a gift tax, and there's a lifetime exemption amount beyond annual gifts that can apply before any gift tax is due. If So-hyun's grandmother had not exceeded her lifetime exemption amount and the annual gift exclusion, So-hyun would not owe any taxes on the $100,000. Therefore, So-hyun should not owe any taxes on the gift from her grandmother for her use for college expenses or starting her family.

Answer 2

Since the money was in a checking account and no interest was accumulated on the 100,000 amount. So-hyun does not owe any tax to the government and will collect the whole $100,000 upon the death of her grand-mother.