Question

Alexis transferred $400,000 to a trust with directions to pay income to her spouse, William, for his life. After William's death the corpus of the trust will pass to William's son. If the life estate is valued at $72,000, what is the total amount of the taxable gifts??

a. $386,000
b. $59,000
c. $374,000
d. $324,000
e. None of these

Answer 1

the total amount of the taxable gifts is $385,000

Step-by-step explanation:

The computation of the total amount of the taxable gifts is shown below:

= (The value of the estate - annual exclusion amount) + (transferred amount - The value of the estate)

= ($72,000 - $15,000) + ($400,000 $72,000)

= $385,000

hence, the total amount of the taxable gifts is $385,000

This is the correct answer but the same is not provided in the given options

We simply applied the above formula so that the correct value could come

And, the same is to be considered