All the following statements concerning the income, estate, and gift tax consequ
ID: 2455659 • Letter: A
Question
All the following statements concerning the income, estate, and gift tax consequences of a gift to a 2503(b) trust for a minor under 19 years of age are correct EXCEPT:
A. The trust income is payable to the minor beneficiary annually and is taxed to the minor.
B. The trust is a separate tax entity, but the trust pays no income tax because all income is distributed to the minor.
C. The value of the gift for gift tax purposes is only the present value of the income interest.
D. Assets transferred to the trust are not includible in the donor’s gross estate for federal estate tax purposes if the donor is not the trustee.
Provide a detailed explanation. This is estate planning.
Explanation / Answer
Option A is wrong