Ignacio Hernan, is a famous rock/pop musician who has earned a fortune writing chart-topping songs and dropping #1 albums for decades. He is now 45 years old, is married, and has 2 minor children. In preparation for their kids' futures and to take advantage of the increased lifetime estate exemption before 2026, Ignacio has decided to give 50% of his small business - Why Georgia, LLC - to an irrevocable non-grantor trust, for the benefit of his children when he expires. Prior to the gift, Why Georgia, LLC is a single-member LLC. The gift to the trust will be made in 2023 and he estimates 100% of the LLC is worth $20M. He has never filed a gift tax return before and he would like to know if he needs to file a gift tax return for 2023. IRS Code?

Does he need to file a gift tax return for 2023? IRS Code?
If so, how is the value of the gift determined? IRS Code?
Are there any important considerations we should share with him for valuing the gift? IRS Code?
Will he need to pay gift tax in 2023 if this is the only gift he made in the year? IRS Code?
Can he split the gift with his spouse? IRS Code?
If his goal is to fully utilize the increased lifetime estate exemption, has he accomplished that in 2023 if the value of the 50% interest in Why Georgia, LLC is determined to be $10M? IRS Code?
What is the federal tax entity classification for Why Georgia, LLC after the gift is made to the trust? IRS Code?

Answer rating: 100% (QA)

1 Does he need to file a gift tax return for 2023 Yes if the gifts value exceeds the annual gift tax ... View the full answer