Liam transferred $100,000 to an irrevocable trust for the benefit of his minor child, Elijah. The transfer was
eligible for the annual exclusion. The trust permits the trustee to accumulate trust income within the trust, and only make distributions to Elijah based upon an ascertainable standard until Elijah is 21 years old. When Elijah attains the age of 21, the trust must terminate and the trust assets must be distributed to Elijah. Which type of trust has Liam created?
a. 2503(b) Trust.
b. 2503(c) Trust.
c. Totten Trust.
d. Intentionally Defective Grantor Trust (IDGT).
Noah, a single man, owned a building with a fair market value of $2,000,000. Noah’s adjusted basis in the building was $1,000,000. This year, Noah agreed to sell the building to his adu son, Robby for $1,300,000. What is the amount of Noah’s taxable gift?
a. Noah has made a taxable gift of $300,000.
b. Noah has made a taxable gift of $685,000.
c. Noah has made a taxable gift of $700,000.
d. Noah has made a taxable gift of $2,000,000.
10. Geoff has always been a successful businessman. Several years ago he purchased what he thought was prime property in Louisiana for $100,000. Unfortunately, he did not realize the property was pure swamp land and completely uninhabitable by anyone (except maybe some Cajuns from New Orleans). Shortly after he purchased the property, Geoff realized the investment was a flop! To hide his embarrassing investment, he decided to give the property to his cousin, Rustin, as a graduation present when Rustin graduated from LSU (Geaux Tigers!). When Geoff gave the property to Rustin, the value of the property had fallen to $80,000. Rustin promptly bui a house in the middle of the swamp and made his home. After six months of owning the property, and sharing his bed with the alligators, Rustin decided to move back to the city. Luckily, he sold the property a week later to an old Cajun named Boudreaux for $75,000. What is Rustin’s loss on the sale of the land?
a. $5,000 short term capital loss.
b. $5,000 long term capital loss.
c. $25,000 short term capital loss.
d. $25,000 long term capital loss.