Ayuma and Sakura reside in a common law property state and recently became engaged. Ayuma is a retired sports executive with a considerable fortune and has a son from a previous marriage. Sakura has never been married. Ayuma has presented Sakura with a five-carat diamond ring, contingent upon her signing of a premarital agreement. The federal income tax consequences of the premarital agreement depend in large part upon which of the following?

1. The original owner of the ring
2. Whether the transfer under the agreement is treated as a gift
3. Local and state law
4. Whether the transfer under the agreement is treated as a transfer for consideration

A)

III and IV

B)

II and IV

C)

II and III

D)

I and II