This Year Nathan Transferred $7 Million to an Irrevocable Trust

question 71

Multiple Choice

This year Nathan transferred $7 million to an irrevocable trust established for the benefit of his nephew. The trustee is directed to accumulate income for the next five years before distributing the trust corpus to Nathan's nephew. In past years Nathan has made taxable gifts of $6 million and used an applicable credit on an exemption equivalent of $5 million. What amount of gift tax, if any, must Nathan remit?

• A) $240,000.
• B) $400,000.
• C) $345,800.
• D) zero-there is a $11.4 million exemption equivalent.
• E) None of the choices are correct. The amount of tax cannot be estimated without the use of a tax rate schedule.

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Definitions:

Threatening

Behaviors, actions, or statements intended to cause fear or apprehension in others, often as a means of controlling or influencing their actions.

Leading Question

A type of question that suggests a particular answer or is structured in such a way to guide the respondent's answer.

Treatment Center

A healthcare facility specialized in providing therapeutic interventions for various medical or psychological conditions.

Sarcasm

The use of irony to mock or convey contempt, often characterized by verbal comments that mean the opposite of what they seem to say.