Jack and Jill are married and agree to split the gifts that they made during 2017. Jack gives his nephew, James, $37,000, and Jill gives her niece, Janice, $14,000. Which statement is true regarding Jack and Jill's gifts?
A. Jack and Jill can combine their gifts of $50,000 on one gift tax return and take a $14,000 annual exclusion for each recipient.
B. Jack and Jill must file separate gift tax returns, and each may take a $14,000 annual exclusion for his or her gift.
C. Jack and Jill must file separate gift tax returns and report one-half of each gift on each return before applying the $14,000 annual exclusions.
D. None of the answers are correct.
Answer: C. Jack and Jill must file separate gift tax returns and report one-half of each gift on each return before applying the $14,000 annual exclusions.
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What will be an ideal response?