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American College Exam HS330 Topic 1 Question 101 Discussion

Actual exam question for American College's HS330 exam
Question #: 101
Topic #: 1
[All HS330 Questions]

Alan, a widower, is a retired executive with substantial assets. He wishes to provide for the financial security of his two grandchildren since their father, Alan's son, has always managed money poorly. This year Alan would like each grandchild to receive a substantial gift. Which of the following statements concerning the generation-skipping transfer tax (GSTT) on these gifts is (are) correct?

1. Federal estate or gift tax will not be imposed if the gift is otherwise subject to the GSTT.

2. Assuming no prior gifts, Alan can gift a cumulative total of (not including the annual exclusion) $1.5 million to his grandchildren without the imposition of the GSTT.

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Suggested Answer: B

by Pauline at Sep 13, 2024, 07:58 PM

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France
9 months ago
Wait, did they just say 'Alan, a widower'? That makes this even more complicated. I feel for the guy, but he better get some good advice on this.
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Quentin
9 months ago
A: Really? I thought the federal estate or gift tax will not be imposed if the gift is otherwise subject to the GSTT.
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Katie
9 months ago
B: No, I believe it's C) Both I and II.
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Jina
9 months ago
A: I think the answer is B) II only.
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Mitzie
10 months ago
I agree with Rutha, I think the answer is C) Both I and II because Alan can gift up to $1.5 million without GSTT.
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Lizbeth
10 months ago
Okay, so Alan's trying to do something nice for his grandkids. I hope he knows what he's doing with this GSTT thing.
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Brittni
9 months ago
B) II only
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Yuki
9 months ago
I think Alan should consult with a tax professional to make sure he's making the right decision.
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Felicitas
9 months ago
A) I only
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Lucy
10 months ago
Hmm, let me think about this. The GSTT is a tricky one, but I'm pretty sure the answer is C - both statements are correct.
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Tresa
10 months ago
What? There's a tax on skipping generations? Sounds like a plot from a sci-fi movie.
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Brandee
9 months ago
Linsey: Right, he can gift up to $1.5 million without triggering the GSTT.
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Olive
9 months ago
So, Alan needs to be careful with how much he gifts to his grandchildren to avoid the GSTT.
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Linsey
9 months ago
I heard about that. It's to prevent wealthy individuals from avoiding estate taxes by passing assets directly to grandchildren.
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Malcolm
10 months ago
Yeah, it's called the generation-skipping transfer tax.
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Rutha
10 months ago
I disagree, I believe the answer is C) Both I and II.
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Fannie
10 months ago
I think the answer is B) II only.
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