Question $4$

Franky Generous asks you to prepare a Form $709$ for a large gift he made last year. When you request copies of his prior year gift tax returns he responds, "What do gifts in prior years have to do with my current gift?" Which of the following responses inaccurately describes the law pertaining to prior gifts?

The gift tax is cumulative in effect and accomplishes this end by requiring that past computing the current gift tax.

Adding past taxable gifts to current gifts does not cause a double tax because the donor is always allowed a full credit for all prior gift taxes paid.

Some measure of relief from double tax is provided by allowing the donor a credit for prior gitt taxes paid, altho is based on current year gift tax rates.

Adding prior taxable gifts to current taxable gifts potentially causes current taxable gifts to be taxed in a higher bracket.

None of the above.