Question

Which of the following statements is false? a. The annual maximum deduction of net capital loss for individual income tax is ($ 3000).

b. The Unified Transfer Tax Credit only offsets federal gift tax and not federal estate tax.

Answer 1

Statement b is false. The Unified Transfer Tax Credit offsets both federal gift tax and federal estate tax.

Step-by-step explanation:

The false statement is b. The Unified Transfer Tax Credit only offsets federal gift tax and not federal estate tax. The Unified Transfer Tax Credit actually offsets both federal gift tax and federal estate tax. It allows individuals to reduce or eliminate their federal gift tax and federal estate tax liability by using their Transfer Tax Credit.

For example, if an individual has a federal gift tax liability of $1 million and a federal estate tax liability of $3 million, they can use their Transfer Tax Credit to offset both taxes. If their Transfer Tax Credit is $4 million, the individual will not owe any federal gift tax or estate tax.