Tax Exclusive vs. Tax Inclusive
Is the GST tax itself included in the taxable amount? Who pays the tax? If it is tax inclusive, the GST tax (which is eventually paid) is itself included in the taxable amount. If it is tax exclusive, the taxable amount for a direct skip includes only the net amount received by the beneficiary, not the GST tax itself. The GST tax base does not include the amount of any federal estate or federal gift tax payable with respect to such transfer. This video discusses the gift tax vs. the estate tax model, different methods of comparative costs, and the ratchet down rule.