Which, if any, of the following items is subject to indexation (adjusted to reflect inflation)?
a. The election to split gifts under § 2513.
b. The limitation placed on the amount allowed as a charitable contribution for estate tax purposes (§ 2055).
c. Annual gift tax exclusion.
d. Unified transfer tax rates.
c
RATIONALE: The election to split gifts (choice a.) requires only the consent of the nondonor spouse and the filing of a Form 709—it has no connection to inflation. There is no limitation placed on the charitable deduction allowed for estate tax purposes. (Even the income tax deduction, which is subject to percentage limitation, is not affected by inflation.) Although the annual exclusion (choice c.) is not revised every year, it is adjusted whenever the inflation factor reaches a specified level. The changes to the tax rates (choice d.) are provided by the law and are not dictated by inflation.
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What type of conflict is this? Briefly explain.
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