Exam 12: Estates, Gifts, and Trusts

Cheryl bought some stock for $110,000. Two years later, she gave the stock to her brother, Harold, when its value was $100,000. Three years later, Harold sold the stock for $105,000. What is the value of the gift to Harold, and his gain or loss on the sale, respectively?

Which of the following applies to a simple trust?

Which of the following is a taxable gift (before applying the unified credit)?

The alternate valuation date is:

Bill set up two trusts in 2017. The first was for his son, John, to which he contributed $200,000 during that year. (The income interest was valued at $100,000 and the remainder interest's value was $100,000.) Bill plans to continue contributing money to the trust each year but John can withdraw only the lesser of $15,000 or the amount transferred to the trust each year. The trustee can pay the amount annually until John receives the trust assets at age 40. The second trust was for his 10-year old son, Tim. Bill contributed $50,000 in 2018. (The income interest was equal to $10,000 and the remainder interest was equal to $40,000.) The trustee may distribute the income or principal to Tim until he reaches age 21, at which time the assets will be transferred to Tim. In 2018, Bill contributes $10,000 to John's trust and $16,000 to Tim's trust. What types of trusts are these and what are Bill's gift tax consequences in 2017 and 2018?

Jessica is doing her year-end tax planning and is concerned about gift taxes. If she comes to you for advice, which of the following would you tell her is a taxable gift?

Rachel owned four assets when she died in 2018. Asset Date of Death Value Alternate Date Valuation A $11,160,000 $11,180,000 B 2,200,000 2,390,000 C 3,250,000 3,310,000 D 825,000 700,000 Which value should the executor or personal representative use for valuing the gross estate? Explain.

Silvia has three grandchildren. What is the maximum amount that she can contribute this year to a Section 529 education plan without incurring a gift tax?

What exclusion removes small gifts from the taxable gift base?

What values are used for determining the taxes on taxable estates and taxable gifts?

At the time Karen left for college, her grandfather loaned her $100,000 to be used to pay for her college expenses. She signed a note stating that she would begin repaying the loan over 10 years beginning 6 months after graduation. There is no interest specified for the loan. Which of the following is true?

Charles gave his three grandsons $21,000 each, his friend, Joe, $16,000, and his daughter $31,000. His second wife, Marla, gave her three children $51,000 each and $50,000 to her church. What are their combined taxable gifts if they do not elect gift splitting?

The kiddie tax can only be imposed on

An income interest in a trust

A taxpayer can elect to pay a gift tax rather than use part of his or her unified credit.

The donor of a trust is the same as

Carey is trustee of the Floyd Family Trust. The trust distributes $20,000 income to George, $10,000 to Linda, and $5,000 to George and Linda's church. The Floyd Family trust is:

Clarice, age 90, has accumulated $1.5 million in net assets. Included in this are three blocks of stock: Stock A has a basis of $300,000 and a fair market value of $400,000; Stock B has a basis of $400,000 and a fair market value of $200,000; Stock C has a basis of $100,000 and a fair market value of 400,000. Clarice needs $200,000 now to pay off the mortgage on her daughter's home and she wants to make a $400,000 donation to her Church either as a lifetime or testamentary transfer. Which assets should she sell to accomplish this with the least current tax cost?

A trust that features a demand provision by a beneficiary equal to the annual exclusion is

A Section 529 education savings plan can only be used for the education of the specific child it was set up to benefit.