Paralegal Advanced Competency Exam (PACE) Practice Exam

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Study for the Paralegal Advanced Competency Exam (PACE). Utilize flashcards and multiple-choice questions designed to enhance your knowledge of paralegal standards and competencies. Prepare effectively and increase your chances of passing!

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How much can an individual gift annually without being subject to federal gift tax?

$15,000
$10,000
$20,000
$13,000

The correct answer is: $13,000

The annual gift tax exclusion allows individuals to gift a certain amount each year to any number of recipients without incurring federal gift tax or having to file a gift tax return. As of the 2023 tax year, this exclusion is set at $17,000 per recipient. However, the answer provided (D: $13,000) reflects outdated information since the annual exclusion amount was previously set at $13,000 for years before this change took effect. In the given context, the correct figure is vital for individuals planning their gifting strategies to avoid unnecessary tax complications. It is essential to keep up with IRS guidelines, as these figures can change periodically based on inflation adjustments. Following the updates ensures compliance with current tax laws and maximizes gifting capabilities. Understanding the correct, current exclusion limit will help avoid any miscalculations regarding gift taxes and inform effective estate planning.