Richard placed his portfolio of income-producing stock valued at $200,000 into an irrevocable trust. The trust provides that the trustee is to pay to Richard 7% of the initial value of the trust annually for a period of 12 years. After the 12-year term, the trustee is directed to pay the remaining assets in the trust to Richard's daughter. Which of the following are CORRECT statements regarding the income, gift, or estate tax implications of this trust arrangement? Richard will owe a gift tax based on the present value of the remainder interest given to his daughter. Taxation of the income earned by this trust will be affected by the grantor trust rules. If Richard dies during the 12-year term of the trust, the trust assets will be included in his gross estate. The right that Richard has retained in this trust is considered to be "qualified" for purposes of the Chapter 14 rules. A) II and IV B) I and III C) I, II, III, and IV D) I and IV

Your client has made previous lifetime gifts that have fully exhausted his applicable credit amount. He has asked you to advise him about the tax consequences of transferring his closely held business, valued at $350,000, to his daughter in exchange for a lump sum payment of $300,000. You should inform him that the most important tax implication of this intrafamily business transfer is that     A) he will be making a taxable gift of $50,000, because the value of the transferred business exceeds the lump sum payment of $300,000.     B) he will be making a taxable gift of $350,000, because the Chapter 14 rules require his retained interest to be valued at zero.     C) he will have to include $50,000 minus one annual exclusion in adjusted taxable gifts in his estate tax calculation as an adjusted taxable gift.     D) none of the above.

Mark for follow up Question 57 of 75. The Henry Addison Living Trust is a nongrantor trust with a single beneficiary, Alicia. This year, the trust had distributive income (DNI) of $13,000. After the allocation of deductions, this total includes the following amounts: Net rental income: $10,000. ● Tax-exempt interest: $3,000. Alicia's 2022 distribution was $5,000. How much of Alicia's distribution will be treated as tax-exempt interest? $1,154 $1,500 $3,000 $3,856 Mark for follow up ?nid=6d4c77ee-d986-42b2-b639-13fe1e66d5b5&evalLvl=5&redirect_url=%2fph

(1) Carol owns 4,000 shares of the stock of ABC Corporation. In 2019, in exchange for some of her shares, Carol receives a check for $400,000. Her basis in her entire interest in ABC Corp was equal to $1,000,000, and her adjusted basis of the exchanged shares is equal to $250,000. ABC had $1,200,000 of Earnings & Profits as of the end of the 2019 tax year. In 2018, Carol sustained stock market losses equal to $175,000 and has a LTCL carryover to 2019 equal to $172,000. (a) Assuming she has no other items of income or loss in 2019 and does not itemized her deductions, what are the tax consequences to Carol if the redemption of her shares does not qualify for sale or exchange treatment under §302? The tax consequence (b) Assuming she has no other items of income or loss in 2019 and does not itemized her deductions, what are the tax consequences to Carol if the redemption of her shares does qualify for sale or exchange treatment under §302?