The inclusion rate is a means of reducing the applicable taxes on a given transfer. The...

The inclusion rate is a means of reducing the applicable taxes on a given transfer. The inclusion ratio is found by subtracting the applicable fraction from the number 1. The denominator of the applicable fraction is the value of the property transferred less which of the following?

A. The applicable credit amount

B. The federal estate tax paid by the trust for the property

C. The nonqualified medical or tuition transfer

D. The state inheritance tax paid by the beneficiary for the property

Expert Solution

Applicable fraction- the applicable fraction is a fraction—
(A) the numerator of which is the amount of the GST exemption allocated to the trust (or in the case of a direct skip, allocated to the property transferred in such skip), and
(B) the denominator of which is—
(i) the value of the property transferred to the trust (or involved in the direct skip), reduced by
(ii) the sum of—
(I) any Federal estate tax or State death tax actually recovered from the trust attributable to such property, and
(II) any charitable deduction allowed under section 2055 or 2522 with respect to such property.

So the correct answer is B.

ekkarill92 answered 2 years ago

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