Question

18 $1,500,000 will pass outright from grandfather to grandfather's grandson, paul, by virtue of being named as the beneficiary of a bank account in grandfather's name. grandfather's son, john, who is paul's father is deceased, having died a week before grandfather. what will this event be?

a. a taxable termination.
b. a taxable distribution.
c. a direct skip.
d. none of the above.

Answer 1

ANSWER – A. A taxable termination

Since John, who is grandfather’s direct son is deceased, only the skip person (Paul, grandfather’s grandson) will be the beneficiary and the $1,500,000 will pass outright from grandfather to Paul, grandfather's grandson. This event be a taxable termination.