Detailed Answer
(c) The requirement is to determine the correct statement
regarding the unified transfer tax rate schedule. The unified
transfer tax rate schedule applies on a cumulative basis to both
life and death transfers. During a person’s lifetime, a tax is first
computed on cumulative lifetime taxable gifts, then is reduced by
the tax on taxable gifts made in prior years in order to tax the
current year’s gifts at applicable marginal rates. At death, a unified
transfer tax is computed on total life and death transfers, then
is reduced by the tax already paid on post-1976 gifts, the unified
transfer tax credit, foreign death taxes, and prior transfer taxes.