Question 1

What is the limit on the amount of property that can be transferred to a spouse free of any transfer taxes?

Accepted Answer

A)  $15,000 per year 
B)  $1,000,000 
C)  An unlimited amount 
D)  All transfers to a spouse are subject to transfer taxes 
A)  $15,000 per year 
B)  $1,000,000 
C)  An unlimited amount 
D)  All transfers to a spouse are subject to transfer taxes C

Question 2

The estate tax

Accepted Answer

A)  applies to the person inheriting property. 
B)  was first imposed in 1932 
C)  facilitates wealth distribution. 
D)  was enacted at the same time as the gift tax. 
A)  applies to the person inheriting property. 
B)  was first imposed in 1932 
C)  facilitates wealth distribution. 
D)  was enacted at the same time as the gift tax. C

Question 3

What is the gross estate of a decedent?

Accepted Answer

The gross estate of a decedent is the fair market value of all the property and property interests that are held by the decedent at the date of death.

Question 4

Sarah and Clem are very wealthy and have a program of charitable and family giving. In 2018, they give $20,000 to each of their 4 grandchildren, $30,000 to Clem's brother, stock valued at $40,000 (basis = $20,000) to the Cancer society, and they buy a home valued at $525,000 for Sarah's mother. In addition, Clem puts $500,000 of his stock in the family's business into Sarah's name and sets up a revocable trust for Sarah's sister with $100,000 in bonds. If Clem made $1,900,000 and Sarah $1,300,000 in taxable gifts in 2016, their only prior-year taxable gifts, what are Clem's and Sarah's taxable gifts in 2018 if they elect gift splitting?

Accepted Answer

The answer of Sarah and Clem are very wealthy and...

Question 5

A trust always involves at least three different individuals.

Accepted Answer

A) True 
 B)False

Question 6

All of the following are deductions from the gross estate except

Accepted Answer

A)  the decedent's funeral expenses. 
B)  charitable bequests. 
C)  the annual exclusion. 
D)  a credit card bill of the decedent. 
A)  the decedent's funeral expenses. 
B)  charitable bequests. 
C)  the annual exclusion. 
D)  a credit card bill of the decedent.

Question 7

Indicate by a T if the following results in a taxable gift and an N if it does not result in a taxable gift.
-$30,000 transferred into a minor's trust

Accepted Answer

The answer of Indicate by a T if the following...

Question 8

Jose set up a trust for his two married daughters with $500,000 of stocks and bonds at the end of 2017. Jose can change the trust beneficiaries at any time, however. In 2018, each of the daughters receives $16,000 from the trust. What are Jose's gift tax consequences as a result of these events? Explain.

Accepted Answer

Because Jose can change the trust benefi

Question 9

What is the benefit of the gift-splitting election?

Accepted Answer

The gift-splitting election allows a hus

Question 10

The alternate valuation date for an estate

Accepted Answer

A)  is elected by beneficiaries 
B)  should be elected if the size of the estate increases to receive higher bases 
C)  values the estate six months after the date of death 
D)  does not require the filing of an estate tax return to make the election 
A)  is elected by beneficiaries 
B)  should be elected if the size of the estate increases to receive higher bases 
C)  values the estate six months after the date of death 
D)  does not require the filing of an estate tax return to make the election

Question 11

Morrow died on January 15, 2018 leaving the following assets:   What is the value of the estate if the alternative valuation date is elected and the house was sold on March 10 for $605,000 and the stocks were sold on June 30 for $265,000?

Accepted Answer

A)  $1,375,000 
B)  $1,360,000 
C)  $1,350,000 
D)  $1,343,000 
A)  $1,375,000 
B)  $1,360,000 
C)  $1,350,000 
D)  $1,343,000

Question 12

Indicate by a T if the following results in a taxable gift and an N if it does not result in a taxable gift.
-Converting a $500,000 revocable trust into an irrevocable trust

Accepted Answer

The answer of Indicate by a T if the following...

Question 13

Bobbie, age 10, has $6,000 in interest from a trust established by her grandmother. Bobbie has no itemized deductions and no other income. What is the total tax on this income?

Accepted Answer

$6,000 - $1,050 standard deduction = $4,

Question 14

When will an insurance policy on the decedent's life be included in a decedent's gross estate?

Accepted Answer

A)  The decedent could change the beneficiary. 
B)  The decedent paid the premiums. 
C)  The decedent gave the policy to his daughter two years ago. 
D)  Both b and C 
A)  The decedent could change the beneficiary. 
B)  The decedent paid the premiums. 
C)  The decedent gave the policy to his daughter two years ago. 
D)  Both b and C

Question 15

Who are the principal parties to a trust? Briefly define each.

Accepted Answer

The principal parties to a trust are the

Question 16

What is the purpose of the kiddie tax? What is different in 2018, as compared to 2017?

Accepted Answer

The kiddie tax discourages persons from

Question 17

The annual gift tax exclusion

Accepted Answer

A)  cannot increase beyond $15,000 per donor. 
B)  does not apply to a bargain purchase between related persons. 
C)  applies to future interests. 
D)  removes small gifts from taxation. 
A)  cannot increase beyond $15,000 per donor. 
B)  does not apply to a bargain purchase between related persons. 
C)  applies to future interests. 
D)  removes small gifts from taxation.

Question 18

Indicate by a T if the following results in a taxable gift and an N if it does not result in a taxable gift.
-$60,000 value of a remainder interest in a trust created this year

Accepted Answer

The answer of Indicate by a T if the following...

Question 19

Sybil gave her son Todd 1,000 shares of XYZ stock on January 16, 2018. The stock's high and low selling prices that day were $55 and $53. Sybil had purchased the stock in 2015 for $70 per share. At the end of 2018, Todd sold the shares for $62,000. Provide the details of both income and gift tax effects for these events.

Accepted Answer

Gift value: .5($55 +$53) = $54 per share

Question 20

Which of the following is not an advantage of lifetime gifts?

Accepted Answer

A)  The annual exclusion can shield thousands of dollars from taxation. 
B)  Property appreciation does not enter the estate tax calculation. 
C)  A stepped-up basis is secured for appreciated gifts. 
D)  Gift-splitting allows spouses to combine their annual exclusions 
A)  The annual exclusion can shield thousands of dollars from taxation. 
B)  Property appreciation does not enter the estate tax calculation. 
C)  A stepped-up basis is secured for appreciated gifts. 
D)  Gift-splitting allows spouses to combine their annual exclusions

What is the limit on the amount of property that can be transferred to a spouse free of any transfer taxes?

The estate tax

What is the gross estate of a decedent?

A trust always involves at least three different individuals.

All of the following are deductions from the gross estate except

Indicate by a T if the following results in a taxable gift and an N if it does not result in a taxable gift. -$30,000 transferred into a minor's trust

What is the benefit of the gift-splitting election?

The alternate valuation date for an estate

Morrow died on January 15, 2018 leaving the following assets: What is the value of the estate if the alternative valuation date is elected and the house was sold on March 10 for $605,000 and the stocks were sold on June 30 for $265,000?

Indicate by a T if the following results in a taxable gift and an N if it does not result in a taxable gift. -Converting a $500,000 revocable trust into an irrevocable trust

Bobbie, age 10, has $6,000 in interest from a trust established by her grandmother. Bobbie has no itemized deductions and no other income. What is the total tax on this income?

When will an insurance policy on the decedent's life be included in a decedent's gross estate?

Who are the principal parties to a trust? Briefly define each.

What is the purpose of the kiddie tax? What is different in 2018, as compared to 2017?

The annual gift tax exclusion

Indicate by a T if the following results in a taxable gift and an N if it does not result in a taxable gift. -$60,000 value of a remainder interest in a trust created this year

Which of the following is not an advantage of lifetime gifts?

Introduction to Taxation

The Tax Practice Environment

Determining Gross Income

Employee Compensation

Deductions for Individuals and Tax Determination

Business Expenses

Property Acquisitions and Cost Recovery Deductions

Property Dispositions

Tax-Deferred Exchanges

Taxation of Corporations

Sole Proprietorships and Flow-Through Entities

Filters

Exam 12: Estates, Gifts, and Trusts

What is the limit on the amount of property that can be transferred to a spouse free of any transfer taxes?

The estate tax

What is the gross estate of a decedent?

A trust always involves at least three different individuals.

All of the following are deductions from the gross estate except

Indicate by a T if the following results in a taxable gift and an N if it does not result in a taxable gift. -$30,000 transferred into a minor's trust

What is the benefit of the gift-splitting election?

The alternate valuation date for an estate

Morrow died on January 15, 2018 leaving the following assets: What is the value of the estate if the alternative valuation date is elected and the house was sold on March 10 for $605,000 and the stocks were sold on June 30 for $265,000?

Indicate by a T if the following results in a taxable gift and an N if it does not result in a taxable gift. -Converting a $500,000 revocable trust into an irrevocable trust

Bobbie, age 10, has $6,000 in interest from a trust established by her grandmother. Bobbie has no itemized deductions and no other income. What is the total tax on this income?

When will an insurance policy on the decedent's life be included in a decedent's gross estate?

Who are the principal parties to a trust? Briefly define each.

What is the purpose of the kiddie tax? What is different in 2018, as compared to 2017?

The annual gift tax exclusion

Indicate by a T if the following results in a taxable gift and an N if it does not result in a taxable gift. -$60,000 value of a remainder interest in a trust created this year

Which of the following is not an advantage of lifetime gifts?

Introduction to Taxation

The Tax Practice Environment

Determining Gross Income

Employee Compensation

Deductions for Individuals and Tax Determination

Business Expenses

Property Acquisitions and Cost Recovery Deductions

Property Dispositions

Tax-Deferred Exchanges

Taxation of Corporations

Sole Proprietorships and Flow-Through Entities

Filters