The Nelsons Make Gifts of Appreciated Securities to Their Dependent

question 38

True/False

The Nelsons make gifts of appreciated securities to their dependent daughter (age 20) and son (age 21), neither of which is a student. If the children sell the securities shortly thereafter, the kiddie tax will apply to tax the gain at the parents' tax rate.

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Definitions:

Force Majeure Clause

A contract term anticipating some catastrophic event usually exempting liability when such an event interferes with performance of the contract.

Catastrophic Event

An unexpected, large-scale disaster that causes significant -physical, economical or environmental damage or loss of life.

Condition Subsequent

A contract condition that, when it occurs, ends the party's obligation to perform under the contract.

Unilateral Release

A legal agreement where one party agrees to waive its rights or claims against another party without requiring any action or concession in return.