Ross has already used all but $$1,000,000$ of his GST exemption. He creates an irrevocable trust with the following terms:

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While his wife, Rachel, is alive the trustee can distribute income and principal to her.

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When Rachel passes away, the assets are to be held for their daughter, Emma. Specifically, the trustee can distribute income and principal for Emma$$s benefit during her lifetime.

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After Emma passes away, the trustee is to distribute any remaining assets to Emma$$s children.

Ross funds the trust with $$2,000,000$ and allocated as much GST exemption as he can. When Rachel dies the trust has grown to a value of $$5,000,000.$ When Emma dies, the trust has grown to a value of $$10,000,000.$ How much of the trust will be subject to GST$?$

a$.$ $$1,000,000($$$2,000,000$ gift minus the $$1,000,000$ of available exemption.$)$

b$.$ $$2,000,000($representing the full initial value of the trust.$)$

c$.$ $$2,500,000($representing half the value at the time of Rachel$$s death.$)$

c$.$ $$5,000,000($representing half of the $$10,000,000$ value at the time of the taxable termination.$)$