Franklin established an irrevocable trust with $60,000. He named his daughter Lucinda the beneficiary of the trust and gave her a noncumulative right to withdraw the greater of $5,000 or 5% of trust corpus each year. What is the gift tax consequence if Lucinda does not withdraw money from the trust this year?

Select one:

a.

An annual exclusion is not available to Franklin to offset this taxable gift.

b.

Franklin has an annual exclusion of $14,000 available to offset this taxable gift.

c.

Lucinda will not make a taxable gift if she lets her withdrawal right lapse.

d.

Lucinda must use her unified credit to offset the gift tax on the lapsed portion of the gift.