A Applicable Credit Is Subtracted in Calculating Both the Gift

question 98

Multiple Choice

A applicable credit is subtracted in calculating both the gift tax and the estate tax. Why doesn't this calculation have the effect of increasing the total applicable credit amount?

• A) The applicable credit varies in amount from year to year.
• B) The applicable credit only offsets the exemption equivalent.
• C) The applicable credit cannot be used to offset gift taxes on adjusted taxable gifts.
• D) The tentative estate tax is reduced by only taxes payable on adjusted taxable gifts rather than gross gift taxes.
• E) None of the choices are correct.

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Definitions:

After-Acquired Property

Property acquired by a debtor after the execution of a security agreement, which may still be subject to claims by secured creditors under certain agreements.

Secured Perfected Creditor

This term relates to a creditor who has taken the necessary legal steps to secure a lien against a debtor's property, ensuring a strong claim to the property in the event of default.

Purchase-Money Security Interest

A security interest in goods that secures credit extended by the seller or lender for the purchase of those goods.

Security Agreement

A legal document that grants a lender a security interest in a specified asset or property, which serves as collateral for a loan.