Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Under IRC Sections 2505 and 2010, an individual (U.S. citizen or resident) may give up to a specified amount of gift without any federal gift

Under IRC Sections 2505 and 2010, an individual (U.S. citizen or resident) may give up to a specified amount of gift without any federal gift tax liability. The 2017 tax act, Pub. L. No. 115-97, 11061, increased the necessary exclusion amount from $5 million basic exclusion to $10 million, effective after December 31, 2017. In addition to the basic increase to $10 million, under Section 2613 a generation-skipping transfer tax (two or more generations below the transferor) may be used by taxpayers. The generation-skipping transfer tax applies to gifts to or in trust for beneficiaries who are skip persons as to the transferor.

  • A client approached you with a question about the tax consequences of setting up an irrevocable trust for his two grandchildren to attend college.
  • Discuss the tax issues or consequences of the generation-skipping provision, and a direct gift to the grandchildren instead of creating the trust.
  • Make at least two recommendations to support either a direct gift to the grandchildren or the creation of the trust.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Accounting

Authors: John Hoggett, Lew Edwards, John Medlin

6th Edition

0470806583, 978-0470806586

More Books

Students also viewed these Accounting questions

Question

Calculate the limit lim x-6x+11x - 6 X-2 X-2 ?

Answered: 1 week ago