Alma gives $100,000 worth of publicly-traded stock to her son Murdoch to buy his

Question

Alma gives $100,000 worth of publicly-traded stock to her son Murdoch to buy his love and affection. Murdoch does not want to accept the gift and writes a letter to his mother the week after receiving the stock indicating his refusal. He sends the letter and the stock certificates issued in his name back to his mother. This is an example of what estate planning mechanism?

A. Gift-splitting.

B. The annual exclusion.

C. The charitable deduction.

D. A qualified disclaimer.

A. Gift-splitting.

B. The annual exclusion.

C. The charitable deduction.

D. A qualified disclaimer.

Explanation / Answer

D. A qualified disclaimer.

Explanation : As per section 2158 IRS ,a qualified disclaimer means formal refusal to accept interest received in a property though means like gift . The benificiary of a trust or estate is allowed to make a qualified disclaimer in order to avoid taxation if the following condition are fulfilled :

In the present case Murdoch does not want to accept the gift and writes a letter returning the stock certificates gifted to him . Thus it is regarded as a qualified disclaimer.

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