Basic Estate And Gift Tax Planning Practice Test

An individual taxpayer wants to make gifts in 2026 to two children and is deciding whether to gift on December 31, 2026 or January 1, 2027. The taxpayer plans to transfer $19,000 to each child and wants to maximize annual exclusions over time. Assume the annual gift exclusion is $19,000 per donee and the lifetime exemption is $13,610,000 with a 40% gift tax rate above it. What is the most tax-efficient way to utilize the annual gift exclusion?

An individual taxpayer has a projected taxable estate of $13,900,000 and no prior taxable gifts. Assume the lifetime exemption is $13,610,000, the estate tax rate is 40% above the exemption, and the annual gift exclusion is $19,000 per donee. The taxpayer wants to reduce the taxable estate below the exemption as efficiently as possible. Which strategy best minimizes estate tax liability?