Cathy, who is$$ single, makes gifts of$$ $$50,000$ to each of her two adult children.

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Part $1$

a$.$ Who is primarily liable for the gift tax on the two$$ gifts, Cathy or the two$$ children?

A$.$

$$Cathy$,$ the$$ donor, is primarily liable for the gift tax on the two gifts. The children are contingently liable for payment of the gift tax in the event the donor fails to pay.

B$.$

The children are primarily liable for the gift tax on the two gifts.$$ Cathy, the$$ donor, is contingently liable for payment of the gift tax in the event the donee fails to pay.

C$.$

The children are primarily liable for the gift tax on the two gifts.$$ Cathy, the$$ donor, has no liability.

D$.$

$$Cathy$,$ the$$ donor, and the children are all equally liable for the gift tax on the two gifts.

Part $2$

b$.$ If Cathy has never made a taxable gift in prior$$ years, is a gift tax due on the two$$ gifts?$($Answer before taking the unified tax credit into$$ account.$)$

A$.$

$$No$,$ a gift tax need not be considered on the two gifts regardless of whether Cathy made taxable gifts in prior years.

B$.$

$$Yes$,$ a gift tax is due on the two gifts. Cathy is permitted a $ $18$ comma $000$$$18,000$ annual exclusion for gifts of a present interest to each donee but she is not eligible for the unified credit.

C$.$

$$Yes$,$ a gift tax must be considered on the two gifts. She is permitted a $ $18$ comma $000$$$18,000$ annual exclusion for gifts of a present interest to each donee. Since Cathy has never made a taxable$$ gift, no gift tax will be due because of the unified credit that is available.

D$.$

$$Yes$,$ a gift tax is due on the two gifts after consideration of the annual exclusion and unified credit that is available.