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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