Thinking out loud - Gift tax

[JoshinNC]

This is a completely hypothetical scenario I came up with and wanted to answer.

Parent of college student buys dependent child a car for $20,000 as a graduation gift. But, kid gets married before end of year, so parents can't claim kid as dependent because of MFJ return for kid. Does parent of kid have to file a gift tax return to exclude the $8000 "gift" from gift tax as part of lifetime exclusion? Isn't this just an example of tax code's stupidity? Am I dumb to come up with stuff like this for no reason?

[Larmil]

This is a completely hypothetical scenario I came up with and wanted to answer.

Parent of college student buys dependent child a car for $20,000 as a graduation gift. But, kid gets married before end of year, so parents can't claim kid as dependent because of MFJ return for kid. Does parent of kid have to file a gift tax return to exclude the $8000 "gift" from gift tax as part of lifetime exclusion? Isn't this just an example of tax code's stupidity? Am I dumb to come up with stuff like this for no reason?

Many years ago when I was stationed at USMA, West Point, NY, it was the custom for parents to give the graduates a new car (usually a Corvette, which many of them killed themselves in before ever serving active duty). The exclusion was then $3.000. I doubt if many of them filed a gift tax return. Even in the late sixties a Corvette cost more than $3.000. You are not dumb - Congress is.

[AJsTax]

Gift tax

The exemption for 2008 for the gift tax return is $12,000 per recipient per taxpayer. Thus each parent can give $12,000 to the student for a total of $24,000 per year with no filing requirements.

[Larmil]

The exemption for 2008 for the gift tax return is $12,000 per recipient per taxpayer. Thus each parent can give $12,000 to the student for a total of $24,000 per year with no filing requirements.

Not everyone has two parents.

[AJsTax]

true

What you say is very true and a good catch. Parents was used in plural in the question so I assumed that to be the case. In an actual situation we would know or would need to know before we would offer the answer.