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

Answer rating: 100% (QA)

The rule states that if a trust distribu... View the full answer