Question 14 Which of the following statements is most correct about the $5,000 or 5% (5x5) rule? It converts a future interest gift into a present interest gift. It eliminates estate taxation in the grantor's estate for lifetime gifts to a trust. The rule prevents a release or lapse of a power of appointment from being taxed as a gift if it meets the requirements of the rule. The rule states that if a trust distributes no more than the greater of $5,000 or 5% of the trust corpus to any beneficiary, that amount will not be subject to the income tax when received by the beneficiary Question 15 Donald puts a lot of money into a bucket and gives Melania a power of appointment over the money in the bucket. Melania has the power to distribute that money to any other human being on the planet except herself, her creditors, her estate, or her estate's creditors. What is the correct name for her power of appointment? It is a/an: General power of appointment Limited power of appointment Question 16 In order for a transfer to qualify for the annual exclusion, which of the following is not true? It must be a present interest It must be a completed gift It cannot exceed $15,000 in 2020 unless the spouse consents. It can never be a gift to a trust It must be gratuitous.
Question 14 Which of the following statements is most correct about the $5,000 or 5% (5x5) rule? It converts a future interest gift into a present interest gift. It eliminates estate taxation in the grantor's estate for lifetime gifts to a trust. The rule prevents a release or lapse of a power of appointment from being taxed as a gift if it meets the requirements of the rule. The rule states that if a trust distributes no more than the greater of $5,000 or 5% of the trust corpus to any beneficiary, that amount will not be subject to the income tax when received by the beneficiary Question 15 Donald puts a lot of money into a bucket and gives Melania a power of appointment over the money in the bucket. Melania has the power to distribute that money to any other human being on the planet except herself, her creditors, her estate, or her estate's creditors. What is the correct name for her power of appointment? It is a/an: General power of appointment Limited power of appointment Question 16 In order for a transfer to qualify for the annual exclusion, which of the following is not true? It must be a present interest It must be a completed gift It cannot exceed $15,000 in 2020 unless the spouse consents. It can never be a gift to a trust It must be gratuitous.
Chapter20: Corporations And Partnerships
Section: Chapter Questions
Problem 34P: LO.3, 4, 5 Using the legend provided below, classify each statement under 2019 tax law. a. A foreign...
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Question 14
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Which of the following statements is most correct about the $5,000 or 5% (5x5) rule?It converts a future interest gift into a present interest gift.It eliminates estate
taxation in the grantor's estate for lifetime gifts to a trust.The rule prevents a release or lapse of a power of appointment from being taxed as a gift if it meets the requirements of the rule.The rule states that if a trust distributes no more than the greater of $5,000 or 5% of the trust corpus to any beneficiary, that amount will not be subject to the income tax when received by the beneficiary
Question 15
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Donald puts a lot of money into a bucket and gives Melania a power of appointment over the money in the bucket. Melania has the power to distribute that money to any other human being on the planet except herself, her creditors, her estate, or her estate's creditors. What is the correct name for her power of appointment? It is a/an:General power of appointmentLimited power of appointment
Question 16
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In order for a transfer to qualify for the annual exclusion, which of the following is not true?It must be a present interestIt must be a completed giftIt cannot exceed $15,000 in 2020 unless the spouse consents.It can never be a gift to a trustIt must be gratuitous.
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