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GiftLaw Pro Home   >  Chapter 1 - Taxation and Giving  >  1.4 Generation-Skipping Tax Deductions  >  1.4.3 Inclusion Ratio - Applicable Fraction  >  Basic Quiz

Basic Quiz - 1.4.3 Inclusion Ratio - Applicable Fraction

1. The GSTT rate uses the same tax rates as the gift and estate tax.
           
2. The top estate tax rate is permanently set at 55%.
           
3. The amount of GSTT due is computed by multiplying the taxable amount by the applicable rate.
           
4. The taxable amount in the case of a taxable distribution is the value of the property received reduced by the GSTT exemption.
           
5. The taxable amount in the case of a taxable termination is the value of all the property to which the termination has occurred reduced for certain expenses, such as taxes and debts attributable to the property.
           
6. Tax is due in the case of a direct skip if the value of the property transferred is less than the GSTT exemption.
           
7. The value of a generation-skipping transfer is reduced by any consideration given by the transferee.
           
8. The applicable rate (i.e., actual rate used in computing the GSTT) for GSTT purposes is the maximum federal rate multiplied by the inclusion ratio.
           
9. The GSTT planning goal is to allocate sufficient GSTT exemption so that the inclusion ratio is zero.
           
10. The applicable fraction allows reductions for estate taxes, charitable deductions, and marital deductions.