Table of Contents
Gift Tax Defined1
Unified Transfer Tax System2
Lifetime Exclusion for an Estate2
Why Gift Taxes are Required3
Timing of a Gift3
Gifts to an Entity4
Crummey Trusts4
Gifts to Minors4
| Outright gifts. | 5 |
| 2026 Trust Income Tax Rates | 5 |
| Guardianship | 5 |
| Custodial arrangements. | 5 |
| Present Interest of Gifts to a Minor | 6 |
| Qualified State Tuition Programs | 6 |
Not all Gifts are Subject to Gift Tax6
| Gifts that do not exceed annual exclusion. | 7 |
| Gifts to a Spouse | 7 |
| Charitable Gifts | 7 |
| Transfers to charitable organizations not subject to federal gift tax. | 7 |
| Political Contributions | 8 |
| Qualified Tuition Payments | 8 |
| Medical Costs | 8 |
Annual Exclusion Amount8
Unlimited Donees8
Gifts Exceeding $19,0009
Present Interest vs. Future Interest9
Review Questions11
Review Question Answers12
Trusts14
| Trusts Defined | 14 |
| Reasons for Using a Trust | 14 |
| Living vs. Testamentary Trusts | 15 |
| Building Blocks of a Trust | 15 |
| Trusts - Revocable | 15 |
| Trusts - Living | 16 |
| Reversion Defined | 16 |
| Living Trust Advantages | 16 |
| Living Trust Disadvantages | 16 |
| Pour-Over Will | 17 |
| Trusts - Irrevocable | 17 |
| Trusts - Testamentary | 17 |
The Taxation of Trusts17
| Grantor Trusts | 18 |
| Grantor Retained Income Trusts | 19 |
| Using Revocable Trusts | 19 |
| Estates Compared to Living Trusts | 19 |
| Using Irrevocable Trusts | 20 |
| 2026 Trust Income Tax Rates | 21 |
| Capital Gains Treatment in Trusts | 21 |
| Deduction of Estate Planning Expenses | 21 |
| Deduction of Expenses | 21 |
| Gift Tax with Respect to Trusts | 22 |
| Estate Tax with Respect to Trusts | 22 |
| Unlimited Marital Deduction | 22 |
| Marital Deduction Trust | 23 |
| Qualified Terminable Interest Property (QTIP) Trust | 23 |
| "A-B" Trusts | 23 |
| "A-B-C" (QTIP) Trust | 25 |
| Tax Basis | 25 |
| Alternative Valuation | 26 |
Revocable Living Trust Clauses26
| Identification Clause | 26 |
| Trustee Clause | 27 |
| Property Transfer Clause | 27 |
| Revocation and Amendment Clause | 27 |
| Income and Principle Clause | 28 |
| Recital Clause | 28 |
| Trustee Requirements | 28 |
| Advantages of Hiring Corporate Trustees | 28 |
| Advantages of Hiring Individual Trustees | 29 |
| Trust Termination Clause | 29 |
| Life Insurance Trust | 29 |
Gift Splitting30
| Consent to Gift Split Applies to All Gifts | 30 |
| Gift Splitting Requirements | 32 |
| Community Property States | 33 |
Gift Tax Return34
| Gift Tax Return Due Date: | 36 |
Valuation36
| Real Estate | 38 |
| Valuation Understatement | 38 |
Computing Gift Tax39
Generation Skipping Transfers41
| Transfer Types | 41 |
| Exemption Amount | 42 |
| How to compute generation skipping transfer tax | 42 |
| Generation Skipping Terminations Tax (GSTT) | 43 |
| Generation Skipping Distribution Tax (GSDT) | 43 |
| Direct Skip Gift Tax (DSGT) | 43 |
| Direct Skip Estate Tax (DSET) | 43 |
| Filing the return and paying the GSTT | 44 |
Gifts and bequests from expatriates44
One Big Beautiful Bill Act – Changes related to Estate, Gift, and Generation-Skipping Transfers Taxes47
| Sec. 70106 – Extension and Enhancement of Increased Estate and Gift Tax Exemption Amounts | 47 |
Review Questions48
Review Question Answers49
Glossary52
Index55
Course Details
Author: Andrew Clark, EA
Andrew is an Enrolled agent (#00131887-EA) and the President of both Andrew Clark Enterprises and Tax CE Publishing. Andrew has been involved in the CPE market since 2010, and in addition to writing CPE courses, Andrew provides tax consulting and preparation services to clients in the Sacramento region. Andrew is also an entrepreneur and enjoys consulting with other entrepreneurs to help them achieve success in their own businesses.
Andrew enjoys both reading about taxation topics and creating easy-to-understand programs revolving around these complex concepts. He is also an in-demand lecturer due to his thorough understanding of the tax code and tax code changes.
Publication/Revision Date: 7/21/2026
Course Exam Questions (online): 15 (multiple-choice)
Program Delivery Method: Self-Study (NASBA QAS Self-Study)
Available Formats of Course Text: PDF or PDF plus printed copy sent in the mail
Course Level, Prerequisites, and Advance Preparation Requirements
| License | Course Level | Prerequisites | Advance Preparation Requirements |
|---|
| CPA | Overview | None | None |
| EA/OTRP | Overview | None | None |
* This program is appropriate for professionals at all organizational levels.
Sponsor ID Numbers
National Registry of CPE Sponsors ID: 107615
IRS Qualified Sponsor ID: FWKKO — Course ID: FWKKO-T-00787-26-S
State CPA Board Sponsor ID Numbers (where applicable)
Florida Division of Certified Public Accounting: 0004761
Hawaii Board of Public Accountancy: 14003
New York State Board for Public Accountancy: 002146
Ohio Accountancy Board: CPE .51 PSR
Pennsylvania State Board of Accountancy: PX178025
Texas State Board of Public Accountancy: 009349
Learning Objectives
As a result of studying the course material, you should be able to meet the objectives listed below:
- Describe what financial transactions constitute a gift.
- Recognize when a gift transaction is completed.
- Identify the annual gift exclusion amount.
- Differentiate between present interest and future interest gifts.
- Recognize the types of gifts that are not subject to gift taxes.
- Recognize the benefits of gift splitting.
- Identify the form that is used for gift taxes and the due date for submitting it.
