Answered: Which one of the following correctly…

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Accounting

Which one of the following correctly states a purpose of the generation-skipping transfer tax (GSTT)?

SWFT Comprehensive Vol 2020

43rd Edition

ISBN:9780357391723

Author:Maloney

Publisher:Maloney

Chapter1: An Introduction To Taxation And Understanding The Federal Tax Law

Section: Chapter Questions

Problem 20DQ

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Question

Which one of the following correctly states a purpose of the generation-skipping transfer tax (GSTT)?

To encourage the transfer of wealth to younger generations

To ensure transfer taxes are paid at each generation by transfer taxing wealth when it is transferred to a skip person

To discourage generation-skipping transfers by using up the transferor's gift or estate tax credit amounts more quickly

To substitute the GSTT for any gift or estate tax due on the transfer instead of imposing the gift or estate tax

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