Jose Set Up a Trust for His Two Married Daughters

question 8

Essay

Jose set up a trust for his two married daughters with $500,000 of stocks and bonds at the end of 2017. Jose can change the trust beneficiaries at any time, however. In 2018, each of the daughters receives $16,000 from the trust. What are Jose's gift tax consequences as a result of these events? Explain.

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Definitions:

Tea Act

A 1773 law passed by the British Parliament to reduce the massive amount of tea held by the financially troubled British East India Company in its London warehouses and to help the struggling company survive.

American Resistance

Refers to the opposition and pushback by American colonies or citizens against foreign control, policies, or interventions, notably during events like the American Revolution.

East India Company

A historic English company formed for the exploitation of trade with East and Southeast Asia and India, incorporated by royal charter in 1600.

French and Indian War

A conflict in North America that was part of a global struggle between Britain and France (1754-1763), ending with the British victory and significant territorial gains in North America.