Estate and Gift Tax

The unified transfer tax for 2025: the $19,000 annual exclusion, unlimited exclusions for tuition, medical and spousal gifts, gift splitting, the $13,990,000 basic exclusion, portability, what goes into the gross estate, and the Forms 706 and 709 filing rules. The SEE tests whether a return is required and how much of a gift is taxable.

Specialized Returns for Individuals4 min read6 sections

Must-know for the exam

2025 gift tax annual exclusion is $19,000 per donee for present-interest gifts; $190,000 for gifts to a non-citizen spouse (IRC 2503(b), 2523(i); Rev. Proc. 2024-40 sec. 3.43).
2025 basic exclusion amount is $13,990,000; the $15,000,000 figure under P.L. 119-21 starts after 2025 (IRC 2010(c)(3); Rev. Proc. 2024-40 sec. 3.41).
Tuition paid directly to a school and medical care paid directly to a provider are excluded without limit; room and board are not (IRC 2503(e)).
Gift splitting treats each spouse as giving half of every third-party gift, but requires Form 709 with consent (IRC 2513; Form 709 instructions (2025)).
Form 709 is due April 15, 2026 for 2025 gifts; Form 4868 also extends it, otherwise use Form 8892 (IRC 6075(b); Form 709 instructions (2025)).
Form 706 is due 9 months after death, extendable 6 months on Form 4768; required when the gross estate plus adjusted taxable gifts exceeds the basic exclusion (IRC 6075(a), 6018).
Portability of a deceased spouse's unused exclusion needs a Form 706 election; non-filing estates may elect within 5 years of death (IRC 2010(c)(5); Rev. Proc. 2022-32).
A qualified joint interest between citizen spouses puts one-half in the gross estate; other joint tenancies include all except the survivor's proven contribution (IRC 2040).
Life insurance is in the gross estate if the decedent held incidents of ownership or transferred the policy within 3 years of death (IRC 2042, 2035).
Alternate valuation (6 months after death) is allowed only if it lowers both the gross estate and the estate and GST tax (IRC 2032(c)).

On this page · 6 sections

Traps that cost marks

Using the 2024 amount.
Skipping Form 709 because no tax is owed.
Assuming split gifts need no return.
Extending the tuition exclusion to room and board.
Using the 2026 $15 million figure for 2025.
Using the individual income tax due date.
Assuming portability applies without a Form 706.
Applying the contribution rule to spouses.

Why it matters on the exam

Estate and gift tax is a small part of Part 1, but the questions are predictable: the 2025 dollar amounts, whether a Form 709 is required, how gift splitting works, and what is included in the gross estate. Most taxpayers owe no transfer tax because the unified credit covers $13,990,000 of lifetime taxable transfers, so many questions ask about filing, not paying.

Gifts are never income to the recipient (IRC 102). The donor files and, if tax is due, pays.

Gifts: exclusions and splitting

Transfer	2025 treatment
Present-interest gift to anyone	First $19,000 per donee excluded
Gift to a US citizen spouse	Unlimited marital deduction
Gift to a non-citizen spouse	First $190,000 excluded
Tuition paid directly to the school	Excluded without limit
Medical care paid directly to the provider	Excluded without limit
Gift to a public charity	Deductible in full

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Specialized Returns for Individuals