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I am preparing the gift tax return for a client that contributed more to his life insurance trust than is covered by the Crummey powers. The software shows the entire gift as qualifying for the annual gift tax exclusion, not just the $5,000 withdrawal right. Am I missing something? Is there a work around? Thanks for your help.
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Is $5K the limit?
Frequently it's stated as greater of 5% or $5,000.
If it is $5,000, I think you have to show the gift as $5,000 in order to only get a $5K exclusion.
The more I know the more I don’t know.
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Yes, $5,000. The Crummey input sheet with multiple beneficiaries is not set up for that. I had to override half a dozen fields. In retrospect I should have used two input sheets, one for the portion allowable for the annual exclusion and one for the rest with the no Crummey power box checked.
