12.5 - Generation Skipping Transfer Tax (GSTT) Flashcards
GSTT
Define generation skipping transfer tax or GSTT
- Tax imposed on each direct skip, taxable distribution or taxable termination
- Person @ least 2 generations younger than transferor
GSTT
Is the GSTT imposed separately from gift and estate tax?
Yes
Direct Skip
Who is liable for the tax on a direct skip?
transferor (one transferring)
Direct Skip
What is a direct skip?
- Transfer of an interest in property to a skip person
Skip Person
What is a “skip person”?
- Natural person assigned to a generation two or more below the transferor
Skip Person
Define the age difference test when the “skip person” is not a related person
- 37 ½ years – 62 ½ years after transferor
Taxable Distribution
Who is liable for the tax on a taxable distribution?
Transferee (one receiving the transfer)
Taxable Distribution
Define a taxable distribution
- Distribution from trust to skip person of income or principle other than direct skip or taxable termination
Taxable Termination
What is a taxable termination?
- Termination of an interest in property held in trust
Taxable Termination
Has taxable termination occurred if a nonskip person has an interest or distributions to a skip person are not allowed?
No - termination has not occurred
Taxable Termination
Who is liable to pay tax in a taxable termination?
Trustee
GSTT & Estate Tax
Does gift splitting apply to GSTT ? If so, how it is allocated?
- Gift splitting apply to GSTT
- $10.9 Million allocable
GSTT & Estate Tax
What is the exemption amount applied to GSTT for 2016 tax year?
- $5.45 Million (2016)
Indexed for inflation
GSTT & Estate Tax
True or False >>>
- GSTT approximates the maximum federal estate tax that would have been applied to the transfer
True
Inter Vivos
What are inter vivos gifts?
- Gifts between living people
