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I have read the basic FAQ on the subject of Family Loans and Gift tax issues. But I still need a bit of help.

1. The "unified" credit for taxable gifts: ($650K-1998)
I was under the understanding that this credit applies only to a spouse. As I read the Q&A, it lead me to understand that the credit is cumulative, and can be applied to many persons, not only my spouse. If I give my kid $100K as a outright tax free gift, it reduces my lifetime exemption to $550K for my wife. Is this the correct interpretation?

If I made this gift to my kid, do I have to file something with the IRS?

2. If instead of an outright gift of $100K to my kid (the second exception to gift tax), I instead loan him $100K interest free. Do I need to file something with the IRS? Is there a time limit imposed by the IRS on the loan? (I understand the $1000 investment income limit)

3. I'm sure there is another question I haven't been smart enough to ask. Any additional cautions or guidance are greately appreciated.

I believe that our children need all the help they can get to make their place in our great society a rewarding and prosperous one. To that end, we love them and nurture them as best we can.

Thanks for the help,

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