Business Terms

Question 1

Luxury Item

Answer 1

A luxury item is not necessary to live, but it is deemed highly desirable within a culture or society. Demand for luxury goods increases when a person’s wealth or income increases. Typically, the greater the percentage increase in income, the greater the percentage increase in luxury item purchases.

Since luxury goods are expensive, wealthy people are disproportionate consumers of luxury goods. Those who are not wealthy don’t usually buy luxury goods since a greater percentage of their income goes to need-based expenses in order to live. Luxury goods can be considered conspicuous consumption, which is the purchase of goods mainly or solely to show off one’s wealth.

Question 2

Gift Splitting

Answer 2

Gift splitting allows married couples to split the value of a gift between them to double their allowed annual gift tax exclusion amount. This is usually something done when helping someone out with a financial gift and the involved parties want to avoid the gift tax levied by the IRS.

Question 3

Gift In Trust

Answer 3

A gift in trust is a special legal and fiduciary arrangement that allows for an indirect bequest of assets to a beneficiary. The purpose of a gift in trust is to avoid the tax on gifts that exceed the annual gift tax exclusion limit. This type of trust is commonly used to transfer wealth to the next generation.

Question 4

Brexit

Answer 4

Brexit is a portmanteau of the words “British” and “exit” coined to refer to the U.K.’s decision in a June 23, 2016 referendum to leave the European Union (EU). Brexit took place at 11 p.m. Greenwich Mean Time (GMT), Jan. 31, 2020.

While the U.K. is officially out of the European Union, it is now in a transition period to negotiate a new relationship with the EU. During this period, it does not have a say in EU policy, but will still need to abide by EU rules. The U.K. must now renegotiate its entire trade relationship with the EU, its largest trading partner, by January 1, 2021. If it doesn’t, then it will suddenly be subject to a host of rule changes and tariffs as it falls out of the EU single market and customs union. This scenario, called a “no-deal” Brexit, would likely be significantly damaging to the U.K. economy.

Question 5

Grade A Banking Business Loan

Answer 5

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