Consider the following transactions that occur in the current year, 2020.

Requirement: For each of the transactions, indicate the amount of the annual exclusion available. Explain your answer. (Enter a "0" if no exclusion is available.)

A. Talula creates a trust in the amount of $700,000 for the benefit of her eight-year-old daughter, Mara. She names a bank as trustee. Before Mara reaches age 21, the trustee in its discretion is to pay income or corpus (trust assets) to Mara or for her benefit. When Mara reaches age 21, she will receive the unexpended portion of the trust income and corpus. If Mara dies before reaching age 21, the unexpended income and corpus will be paid to her estate or a person (or persons) she appoints under a general power of appointment.

A ______ exclusion is available in this scenario since the trust _________(choose from list below 1-3)__________________.

1. Does not qualify as either a Sec. 2503 (c ) trust or a Crummey trust.

2. Qualifies as a Crummey trust.

3. Qualifies as a Sec. 2503 (c ) trust.

B. Assume the same facts as in Part a except Mara is age 28 when Talula creates the trust, and the trust agreement contains age 41 wherever age 21 appears in Part a.

C. Assume the same facts as in Part b except the trust instrument allows Mara to demand a distribution by December 31 of each year equal to the lesser of the amount of the annual exclusion for federal gift tax purposes or the amount transferred to the trust that year.