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?

Question

Quizplus · Accepted Answer

The taxable gift is the value of the remainder interest, which is the total transfer ($400,000) minus the value of the life estate ($72,000). Therefore, $400,000 - $72,000 = $328,000. However, the correct choice is $386,000, which suggests a mistake in the options or the problem statement.

Alexis Transferred $400,000 to a Trust with Directions to Pay