Ans is D
An “annual exclusion” of gifts made to any one person during a calendar year is excludable from taxable gifts. This amount is indexed for inflation and is $14,000 for 2014.
However, the annual exclusion only applies to a “gift of a present interest.”A present interest gift is an unrestricted right to the immediate use, possession, or enjoyment of the property or of the related income.
There is an exception to the present interest rule. A transfer for the benefit of a person who has not attained age 21 is considered a gift of a present interest if all of the following conditions are satisfied:
Both the property and its income may be spent by or for the benefit of the minor before she or he reaches 21 years old.
Any portion of the property or its income not expended for the minor before reaching 21 years of age must go to the minor at 21 years of age.
If the minor dies before reaching 21 years of age, the property and its income must be payable to the minor's estate or as the minor directs (under a “general power of appointment”). (IRC Section 2503(c))
Since this question states that only the interest income is to go to the minor (not the corporate bond itself), it does not qualify for the $14,000 annual exclusions. None of the gift ($8,170) is excludable from taxable gifts.
FAR : 68, 74, 83 Thank you God 🙂
BEC : 78 (8/27) 🙂
REG : 72 ,80 (2/25) 🙂
AUD : 69,67, 07/23
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