Exam 12: Estates, Gifts, and Trusts

All of the following are deductions from the gross estate except

Putting cash into a joint bank account is a gift to the joint tenant when deposited.

An income tax return for a fiduciary uses the same income tax rate schedule as an individual filing a separate return.

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?

The kiddie tax applies to all unearned income of a child under 19.

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

A trust always involves at least three different individuals.

A taxpayer must not retain any incidents of ownership in a life insurance policy on his or her life to have it excluded from his or her taxable estate.

The unified credit for 2018 gifts is equivalent to an exemption amount of:

George made a gift of stock valued at $450,000 (basis = $300,000) to his daughter Sally and was required to pay a gift tax of $30,000 on this gift. Which of the following is true regarding this gift?

John made $3,400,000 in taxable gifts prior to his death at the beginning of 2018. His wife, Lola, is the executor of John's estate, and made taxable gifts of $800,000 prior to 2018. What is the maximum amount of taxable lifetime gifts that Lola can make in 2018 before she will have to begin paying a gift tax?

A fiduciary tax return must be filed for

Farouk transfers bonds with a face value of $10,000 into his dependent son's name on January 1, 2018 as his son will turn 24 this year. The bonds pay 8 percent interest annually and Farouk bought the bonds in 2009 for $9,500 (the discount was not required to be amortized). His son sells the bonds for $10,500 at the end of 2018 after receiving the 2018 interest. If Farouk is in the 37 percent marginal tax bracket, how much did he save in 2018 in taxes by transferring the bonds into his son's name. His son had no other income in 2018.

Why do we call the gift and estate rate schedule a unified schedule?

Quinn made a taxable gift of a $4,500,000 home (after his annual exclusion) to his daughter in 2011. In December of the current year, Quinn made taxable gifts totaling $15,000,000 (after annual exclusions). What is Quinn's gift tax in 2018 if 2011 was the only year in which he made taxable gifts?

What is a remainderman?

Glenda, age 8, has $6,150 interest from a trust fund established by her grandfather several years ago. How much of Glenda's income is taxed at the trust and estate's tax rate?

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

In 2018, Bill and his wife, Helen, made the following gifts: Bill's gifts: $50,000 to each of his five children; $30,000 to each of his six grandchildren; $100,000 to Central Hospital for his nephew's hospital bill. Helen's gifts: $100,000 to each of her two children; $50,000 to each of her three grandchildren; $200,000 a state senator's reelection campaign. What are Bill's and Helen's respective taxable gifts (before their unified credit) if they do not elect gift splitting.

What is the difference between the estate tax and the estate income tax?