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    Taxes with Stocks and Trusts

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    A) Raquel transferred $100,000 of stock to a trust, with income to be paid to her nephew for 18 years and the remainder to her nephew's children (or their estates). Raquel named a bank as independent trustee but retained the power to determine how much income, if any, will be paid in any particular year. Is this transfer a complete gift? Why Please Explain.

    B) This year Gerry's friend, Dewey, was disabled. Gerry paid $15,000 to Dewey's doctor for medical expenses and paid $12,500 to State University for college tuition for Dewey's son. Has Gerry made taxable gifts, and if so, in what amounts?

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    Solution Preview

    A. No, it is not a complete gift because Raquel is still retains power in terms of income. If the stock was given completely to her nephew's children, then upon Raquel's death, the stock would be taxable for anything over the $100,000. For example, let's say the stock is worth $150,000 at the time of Raquel's death, then the ...

    Solution Summary

    The expert examines the taxes with stock and trust. Whether a transfer is a complete gift is determined.