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Question 1
Diana died in early 2003. Her will specified the following bequests: $111,000 to her son, Ethan, $60,000 to her grandson, Armstrong and $30,000 to her great-grandson, Carson. Lastly, she left her sister, Kelly, $25,000. Ethan was already very wealthy; he decided to disclaim the $111,000 bequest. When the $111,000 passes to Armstrong instead, it will be subject to the GST tax.
Correct
Incorrect!
Correct When a designated person to receive a bequest makes a disclaimer, the asset is then transferred to the next beneficiary in line. This substituted transfer does not subject it to the GST tax. When Ethan disclaimed the $111,000 bequest, the subsequent transfer to his son (a qualifying person under the GST tax) was still not subject to the GST tax because this type of transaction is exempt from GST taxation.
Incorrect! When a designated person to receive a bequest makes a disclaimer, the asset is then transferred to the next beneficiary in line. This substituted transfer does not subject it to the GST tax. When Ethan disclaimed the $111,000 bequest, the subsequent transfer to his son (a qualifying person under the GST tax) was still not subject to the GST tax because this type of transaction is exempt from GST taxation.