J.K. Lasser's Your Income Tax 2013: For Preparing Your 2012 Tax Return

39.4 Gift Tax Credit

On Form 709, any gift tax that you otherwise would owe is eliminated or reduced by a tax credit. The credit against taxable gifts for 2012 is $1,772,800, offsetting the tax on the exemption amount of $5,120,000. If your spouse died in 2011 and your spouse’s estate made the election on a timely filed Form 706 to transfer to you his or her unused exemption amount (39.9), your maximum 2012 gift tax exemption is increased by the unused exemption amount; see the Form 709 instructions. Any credit that was used to offset gift tax in prior years reduces the credit available for 2012.

The exemption and credit amounts for 2013 gifts were uncertain when this book went to press. Legislation is needed to prevent the credit from dropping to $345,800, equivalent to only a $1million exemption. An extension of the 2012 rules is considered likely; see the e-Supplement at jklasser.com for the 2013 exemption and credit amounts.