This Year Nathan Transferred $2 Million to an Irrevocable Trust

question 101

Multiple Choice

This year Nathan transferred $2 million to an irrevocable trust established for the benefit of his nephew. The trustee is directed to accumulate income for the next 5 years before distributing the trust corpus to Nathan's nephew. In past years Nathan has made taxable gifts of $6 million and used a unified credit on an exemption equivalent of $5 million. What amount of gift tax, if any, must Nathan remit?

• A) $300,000
• B) $400,000
• C) $345,450
• D) zero - there is a $10.68 million exemption equivalent
• E) None of these.

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Definitions:

Hemispheres

Refers to either of the two halves of the brain or the Earth, separated by the brain's longitudinal fissure or the Earth's equator, respectively, and each with distinct functions or characteristics.

Cerebrospinal Fluid

A clear, colorless body fluid found in the brain and spinal cord, acting as a cushion for the brain's cortex, providing basic mechanical and immunological protection to the brain inside the skull.

Physical Trauma

Physical trauma refers to body injuries that are severe, life-threatening, or that require medical intervention, often resulting from accidents or violence.

Lateral Ventricle

A set of paired brain structures located in each hemisphere that contains cerebrospinal fluid, important for cushioning and supporting brain tissues.