The third problem deals with Internal Revenue Code sections 2511, 2512 & 2503. The third problem...

 

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The third problem deals with Internal Revenue Code sections 2511, 2512 & 2503. The third problem is to be analyzed in terms of whether a gift was made, and if so does the annual exclusion apply. In your short answers to the problems, please cite the applicable code section, regulation, case, or other authority in support of your analysis. Please note that if the answer is not yes or no, and could be "it depends" please state what the issue is and what additional information you would need to answer the problem. LIZ-1 G creates a trust, income to L for life, remainder to R. The gift of the remainder to R clearly does not qualify for the annual exclusion. Under each of the following circumstances is thére a gift to L and does it qualify for the exclusion? a')- G retains no powers. b). L's interest is subject to a spendthrift clause. Trustee is given power to accumulate income. Trustee is given power to accumulate income, but only with L's approval. Trustee is given power to invade corpus for L's benefit. c). dj e) IIZ-2 a) G transfers an insurance policy on G's life to X. The policy is payable to X. Does the gift Does the gift qualify for the exclusion? b) G transfers an insurance policy on G's life to a trust. The policy is payable to X. Does the gift qualify for the exclusion? 11-3 G creates a trust, income to be accumulated until G's son, S, is 21, at which time accumulated income and corpus is to be distributed to S or S's estate. a) What other terms are necessary to qualify the transfer for the exclusion? b) If all necessary terms were in the trust document, and the trustee was empowered to expend income or corpus only for S's support, would the exclusion be available? c) d) e) Would the exclusion be available if the trust were to terminate when S reached 25 and S had the right to demand the corpus and accumulated income at age 21? Would the exclusion be available if cotpus and accumulated income 'were payable to S at age 18? Would the exclusion be available if only accumulated income are payable to S at age 21? The third problem deals with Internal Revenue Code sections 2511, 2512 & 2503. The third problem is to be analyzed in terms of whether a gift was made, and if so does the annual exclusion apply. In your short answers to the problems, please cite the applicable code section, regulation, case, or other authority in support of your analysis. Please note that if the answer is not yes or no, and could be "it depends" please state what the issue is and what additional information you would need to answer the problem. LIZ-1 G creates a trust, income to L for life, remainder to R. The gift of the remainder to R clearly does not qualify for the annual exclusion. Under each of the following circumstances is thére a gift to L and does it qualify for the exclusion? a')- G retains no powers. b). L's interest is subject to a spendthrift clause. Trustee is given power to accumulate income. Trustee is given power to accumulate income, but only with L's approval. Trustee is given power to invade corpus for L's benefit. c). dj e) IIZ-2 a) G transfers an insurance policy on G's life to X. The policy is payable to X. Does the gift Does the gift qualify for the exclusion? b) G transfers an insurance policy on G's life to a trust. The policy is payable to X. Does the gift qualify for the exclusion? 11-3 G creates a trust, income to be accumulated until G's son, S, is 21, at which time accumulated income and corpus is to be distributed to S or S's estate. a) What other terms are necessary to qualify the transfer for the exclusion? b) If all necessary terms were in the trust document, and the trustee was empowered to expend income or corpus only for S's support, would the exclusion be available? c) d) e) Would the exclusion be available if the trust were to terminate when S reached 25 and S had the right to demand the corpus and accumulated income at age 21? Would the exclusion be available if cotpus and accumulated income 'were payable to S at age 18? Would the exclusion be available if only accumulated income are payable to S at age 21?

Answer rating: 100% (QA)

a If G retains no powers then there is a gift to L that qualifies for the exclusion The applicable code section is 2511 b If Ls interest is subject to ... View the full answer