Tia Funds an Irrevocable Trust with $100,000, Naming Vonda to Receive

question 72

Multiple Choice

Tia funds an irrevocable trust with $100,000, naming Vonda to receive income for life. Tia also grants Vonda a general power of appointment during her life. During the next year, Vonda directs the trustee to give $100,000 to Rick. Which of the following statements is not correct?

• A)Tia made a $100,000 gift to Rick.
• B)Vonda makes a $100,000 gift to Rick.
• C)Tia has made a gift of $100,000 to Vonda.
• D)Exercising a general power of appointment constitutes a gift.

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Definitions:

Income

Financial gains obtained regularly as a result of working or investing.

Imputed Interest Rules

IRS rules that assign a market-rate interest value to certain transactions where no interest or an unrealistic amount of interest is charged.

Personal Residence

A dwelling where an individual lives for the majority of the tax year, which can include a house, apartment, trailer, or boat.

Sale of Property

The act of transferring ownership of real estate or personal property from one party to another for a price.