All of the following are attributes of ATRA, EXCEPT: (A) “Clawback” was avoided

Question

All of the following are attributes of ATRA, EXCEPT:

            (A)    “Clawback” was avoided resulting in no post-mortem inclusion of lifetime gifts in excess of the applicable credit amount in existence as of date of death.

            (B)    ATRA ended an 11 year period of uncertainty regarding estate tax exemptions and transfer taxation and provided us with clarity in planning.

            (C)    Estate, Gift and GSTT exemptions are “permanent” and set at $5 million (indexed for inflation).

            (D)    Reduced the maximum transfer tax bracket to 40%.

            (E)    Permanently extended spousal “portability”.

Can you provide a detailed explanation for your answer? Please only answer if you have a strong background in estate planning.

Explanation / Answer

Answer:

Option C

As the transfer tax bracket is not reduced but increased to 40%.

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