Question - In 2015, John made a single, large cash gift to his father in the amount of $7,194,000. Two years ago, John had made taxable gifts that totaled $400,000. For 2015, John computed the gift tax as follows:
• Gift amount $7,194,000
• Less, annual exclusion (13,000)
• Taxable gift $7,181,000
• Less, remaining exemption amount (4,600,000)
• Tax base $2,581,000
• Tax on $6,400,000 $ 978,200
If $978,200 is not the correct gift tax for this situation, what is John's gift tax for 2015?
A. None of the other answers is correct.
B. $976,800 is the correct gift tax for 2015
C. $2,755,800 is the correct gift tax for 2015
D. $160,200 is the correct gift tax for 2015
E. $860,000 is the correct gift tax for 2015