This year Nathan transferred $7 million to an irrevocable trust established for the benefit of his nephew. The trustee is directed to accumulate income for the next five years before distributing the trust corpus to Nathan's nephew. In past years Nathan has made taxable gifts of $6 million and used an applicable credit on an exemption equivalent of $5 million. What amount of gift tax, if any, must Nathan remit? Multiple Choice $120,000 $345,800 $520,000 zero—there is a $11.7 million exemption equivalent. None of the choices are correct. The amount of tax cannot be estimated without the use of a tax rate schedule.
This year Nathan transferred $7 million to an irrevocable trust established for the benefit of his nephew. The trustee is directed to accumulate income for the next five years before distributing the trust corpus to Nathan's nephew. In past years Nathan has made taxable gifts of $6 million and used an applicable credit on an exemption equivalent of $5 million. What amount of gift tax, if any, must Nathan remit? Multiple Choice $120,000 $345,800 $520,000 zero—there is a $11.7 million exemption equivalent. None of the choices are correct. The amount of tax cannot be estimated without the use of a tax rate schedule.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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This year Nathan transferred $7 million to an irrevocable trust established for the benefit of his nephew. The trustee is directed to accumulate income for the next five years before distributing the trust corpus to Nathan's nephew. In past years Nathan has made taxable gifts of $6 million and used an applicable credit on an exemption equivalent of $5 million. What amount of gift tax, if any, must Nathan remit?
Multiple Choice
$120,000
$345,800
$520,000
zero—there is a $11.7 million exemption equivalent.
None of the choices are correct. The amount of tax cannot be estimated without the use of a tax rate schedule.
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