The benefit of an IDIT over a GRAT is:1. The full value of the remainder interest is a transfer subject to gift tax2. Most of the grantor's assets are sold to the trust at fair market value, freezing their value to the uncollected balance of the promissory note on the grantor's death.3. The trust is taxed on the income from trust property at steeply progressive trust income tax rates.4. An IDIT is a relatively new estate planning tool and thus should be relied upon by taxpayers and practitioners alike.23

IDIT and GRAT are wealth transfer strategies that help in successful transfer of wealth from one…

Answered: The benefit of an IDIT over a GRAT is:…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Similar questions

Comment on the following items relative to tax planning strategies of a fiduciary entity. A. To reduce taxes for a typical family, should income be shifted to a trust or from a trust? Why? B. To reduce overall taxes, should a high-income, wealthy beneficiary be assigned to the first or second tier of trust distributions? Why?
Select the best answer. Which of the following statements regarding transfers of property or services is true? For a transfer of property to a corporation, no gain is recognized by the taxpayer if the O A. transferred property is encumbered with liabilities in excess of the taxpayer's basis in the property. O O O If receipt of stock is subject to a substantial risk of forfeiture, income is recognized by th B. recipient in the year the stock is received even though the substantial risk of forfeiture h lapsed. If the contributing partner receives a capital interest in the partnership upon contributi C. services, the contributor will be taxed on the transfer when the contributor actually rec profits. In order for an exchange of services to a partnership for a profit interest to qualify as a D. nontaxable event, the service partner must provide services to the partnership or for it benefit, and the services must be provided by the service partner in his capacity as a p Submit Answers
Which of the following is correct? The gain basis for property received by gift is the lesser of the donor’s adjusted basis or the fair market value on the date of the gift. The loss basis for property received by gift is the same as the donor’s basis. The gain basis for inherited property is the same as the decedent’s basis. The loss basis for inherited property is the lesser of the decedent’s basis or the fair market value on the date of the decedent’s death. None of the above.
Tax Treatment of Capital Gains from the Sale of Property: Step 1: Determination of Capital Gain: Capital gains arise when the selling price of a property exceeds its original cost basis. The cost basis includes the purchase price and any qualifying expenses, such as closing costs and improvements. The difference between the selling price and the cost basis is the capital gain. Step 2: Classification of Capital Gains: Capital gains are categorized as either short-term or long-term, depending on the holding period of the property. If the property is held for one year or less, the gain is considered short-term. If held for more than one year, it is classified as a long-term capital gain. Step 3: Tax Rates for Capital Gains: The tax treatment of capital gains varies based on their classification: Short-term Capital Gains: Taxed at the individual's ordinary income tax rates, which can be higher than rates for long-term gains.
D3) discussion defining a skip person and to which type of transfers does the GSTT apply?, Define taxable distribution. When must the allocation of the GST exemption take place?, Explain the predeceased ancestor exception, What are the benefits of using a generation-skipping trust? Who pays the income tax on the income generated within a dynasty trust and why should a dynasty trust give some beneficiaries a limited power of appointment?
Which of the following accurately describes the tax implications of investing in real estate and rental properties? a) Real estate investments are not subject to taxation. b) Rental income is tax-exempt. c) Rental income is subject to taxation, and expenses related to real estate investments may be deductible. d) Rental income is taxed at a fixed rate determined by the IRS.
For tax purposes, you can deduct the __________________________ portion of debt service. The tax deductibility of this unique to real estate Group of answer choices 1) principal, true 2) interest, true 3) not enough information has been provided 4) principal, false 5) interest, false
A trust has $7000in interest income. $5000 in tax exempt interest income. $4000 in dividend income and $3000 in capital gains. The trust only expense was $2000 in fiduciary fees. What is the allocation of fiduciary fees to principal income? 1. $0 allocable to principal; $2000 allocable to income 2. $400 allocable to principal; $1600 allocable to income 3. $1600 allocable to principal; $400 allocable to income 4. $2000 allocable to principal; $0 allocable to income
Tax Drill - Property Received by Gift Indicate whether the following statements are "True" or "False" regarding the tax treatment when a taxpayer receives property as a gift. a. If gift taxes are paid by the donor, the portion of the gift tax paid that is related to any appreciation is taken into account in determining the donee's gain basis. b. The holding period for property acquired by gift begins on the date the donor acquired the property if the loss basis rule applies. c. The basis for depreciation on depreciable gift property is the donee's gain basis.
Which is true regarding a like-kind exchange? Group of answer choices Personal-use assets qualify. Stocks and bonds qualify. Non like-kind property is considered “boot.” A taxpayer must elect for the like-kind provisions to apply.
Under what circumstances does an estate have an executor? Select one: a.When the estate exceeds the dollar amount of the estate tax exemption. b.When the will establishes a trust fund. c.When there is no valid will. d.When the will is contested. e.When the will names a specific person to administer the estate.
There are many tax rules and regulations you should be aware of when investing-whether it be in stocks; bonds; mutual funds; real estate; or collectibles such as artwork, antiques, gems, memorabilia, stamps, and coins. Capital gains are proceeds derived from these types of investments. Unless they are specified as being tax-free, such as municipal bonds, you must pay capital gains taxes on these proceeds. Capital gains are taxed in one of two ways. If the investment is held for one year or less, this is considered short-term and is taxed as ordinary income at your regular income tax rate. As this is written, if the investment is held for more than one year, it is considered long-term and qualifies for various tax discounts, as follows for single taxpayers with earnings as shown below. Stocks Held Capital Gains Rates Up to $38,700 $38,700–$426,700 Over $426,700 Over 1 year(long-term) 0% 15% 20% (a) If you are in the 24% tax bracket for ordinary income and have a 15% capital…

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