This Year Nathan Transferred $7 Million to an Irrevocable Trust

question 108

Multiple Choice

This year Nathan transferred $7 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 an applicable credit on an exemption equivalent of $5 million. What amount of gift tax, if any, must Nathan remit?

• A) $320,000.
• B) $800,000.
• C) $345,450.
• D) zero - there is a $11.18 million exemption equivalent.
• E) None of the choices are correct. The amount of tax cannot be estimated without the use of a tax rate schedule.

---

Definitions:

Productivity

Productivity measures the efficiency of production, often quantified as the ratio of output to input within a certain period.

Quick-Fix Mentality

A mindset that prioritizes immediate solutions to problems, often at the expense of addressing underlying issues.

Management by Best-Seller

A management approach where strategies and practices are adopted based on popular business books, often focusing on the latest trends or successful leader insights.

Management Theory

An interdisciplinary study or concept that focuses on understanding, predicting, and controlling human behavior in organizational settings.