Your client has made previous lifetime gifts that have fully exhausted his applicable credit amount. He has asked you to advise him about the tax consequences of transferring his closely held business, valued at $350,000, to his daughter in exchange for a series of fixed single life annuity payments having a present value of $300,000.

You should inform him that the most important tax implication of this intrafamily business transfer is that

A) he will be making a taxable gift of $50,000 because the value of the transferred business exceeds the present value of the expected annuity payments.

B) he will be making a taxable gift of $350,000 because the Chapter 14 rules require his retained interest to be valued at zero.

C) he will have to include $50,000 minus one annual exclusion in adjusted taxable gifts in his estate tax calculation as an adjusted taxable gift.

D) if he has received less than $300,000 from his daughter before he dies, he will have to include the present value of the difference in his gross estate.