Question 1

Which of the following transfers is subject to the gift tax?

Accepted Answer

A)  Matilda contributes $5,000 to a Senate candidate's political organization. 
B)  Frank gives $30,000 to a lobbying group promoting stricter environmental regulations. 
C)  Julia establishes a trust benefiting her nieces and nephews. Julia will determine the amount of any distributions made. 
D)  Lance purchases land, titling it in the names of Lance and Sheryl, joint owners. 
A)  Matilda contributes $5,000 to a Senate candidate's political organization. 
B)  Frank gives $30,000 to a lobbying group promoting stricter environmental regulations. 
C)  Julia establishes a trust benefiting her nieces and nephews. Julia will determine the amount of any distributions made. 
D)  Lance purchases land, titling it in the names of Lance and Sheryl, joint owners.

Question 2

Bryce pays $40,000 for his adult grandson's tuition at medical school and $18,000 for the grandson's room and board in the medical school's dormitory. All payments are made directly to the medical school. Do these payments by Bryce qualify as gifts?

Accepted Answer

Section 2503(e) exempts the pa

Question 3

On September 1, George transfers his entire ownership rights in a $250,000 life insurance policy on his own life to his sister, Sally. The policy's interpolated terminal reserve is $30,000 as of September 1. On July 1, George had paid the policy's $6,000 annual premium. On July 1 of the subsequent year, George again paid the premium on the policy. What are the gift tax consequences in the subsequent year, if any?

Accepted Answer

As a result of the premium pay

Question 4

Discuss the ways in which the estate and gift tax system is a unified system.

Accepted Answer

The same tax rates apply for both gift a

Question 5

Elaine loaned her brother, Mike, $175,000 to purchase a new home. Elaine does not charge Mike any interest on the loan. What are the tax consequences to Elaine and Mike?

Accepted Answer

A)  Elaine is treated as having made a gift of the forgone interest on the $175,000 loan to Mike. 
B)  Elaine only has to impute interest on $75,000 of the loan to Mike. 
C)  If Mike has no net investment income, Elaine does not have to treat the forgone interest as a gift. 
D)  Mike can deduct the interest that he is deemed to have paid Elaine. 
A)  Elaine is treated as having made a gift of the forgone interest on the $175,000 loan to Mike. 
B)  Elaine only has to impute interest on $75,000 of the loan to Mike. 
C)  If Mike has no net investment income, Elaine does not have to treat the forgone interest as a gift. 
D)  Mike can deduct the interest that he is deemed to have paid Elaine.

Question 6

Abby transfers $10,000 to a political organization to promote her favorite candidate for president. Does Abby's transfer qualify as a gift?

Accepted Answer

No, political contri

Question 7

Which of the following statements is true?

Accepted Answer

A)  If the donor does not pay the gift tax, the donee is personally liable for the tax. 
B)  When a married couple elects gift splitting, each spouse is potentially liable for 50% of the gift tax. 
C)  Gift tax returns are due March 15 in the year following the gift. 
D)  Donors can request an automatic extension of time to pay their gift tax even when they don't request to have an income tax extension. 
A)  If the donor does not pay the gift tax, the donee is personally liable for the tax. 
B)  When a married couple elects gift splitting, each spouse is potentially liable for 50% of the gift tax. 
C)  Gift tax returns are due March 15 in the year following the gift. 
D)  Donors can request an automatic extension of time to pay their gift tax even when they don't request to have an income tax extension.

Question 8

Identify which of the following statements is false.

Accepted Answer

A)  Gift tax returns are due annually by April 15 following the year of the gift. No extensions are allowed. 
B)  The donor pays the gift tax generally. 
C)  Gift tax returns are filed on a calendar-year basis. 
D)  Receipt of an extension of time for filing a gift tax return does not extend the due date for payment of the gift tax. 
A)  Gift tax returns are due annually by April 15 following the year of the gift. No extensions are allowed. 
B)  The donor pays the gift tax generally. 
C)  Gift tax returns are filed on a calendar-year basis. 
D)  Receipt of an extension of time for filing a gift tax return does not extend the due date for payment of the gift tax.

Question 9

Contrast the Crummey trust with the Sec. 2503(c) trust.

Accepted Answer

Contributions to both discretionary trus

Question 10

The annual exclusion permits donors to make gifts of $15,000 each to multiple donees.

Accepted Answer

A) True 
 B)False

Question 11

What is a "net gift" and what is the potential income tax problem associated with making a net gift?

Accepted Answer

A potential donor who wants to freeze a

Question 12

A qualified disclaimer must be made within nine months after (a) the day the property is transferred, or (b) the day the person receiving the property becomes age 21, whichever is later.

Accepted Answer

A) True 
 B)False

Question 13

Identify which of the following statements is true.

Accepted Answer

A)  The trustee of a Sec. 2503(c) trust must distribute all of the corpus and accumulated income when the beneficiary reaches the age of 25. 
B)  The gift tax exclusion is available for a gift of a present or future interest. 
C)  A "Crummey demand power" in a trust document allows the donor to demand a distribution from the trust in years in which assets are transferred to the trust. 
D)  All of the above are true. 
A)  The trustee of a Sec. 2503(c) trust must distribute all of the corpus and accumulated income when the beneficiary reaches the age of 25. 
B)  The gift tax exclusion is available for a gift of a present or future interest. 
C)  A "Crummey demand power" in a trust document allows the donor to demand a distribution from the trust in years in which assets are transferred to the trust. 
D)  All of the above are true.

Question 14

George transfers property to an irrevocable trust for the benefit of his adult children and names himself as trustee. The trust document requires the trustee to distribute trust property to the beneficiaries at the trustee's discretion with the possibility of no distribution to certain beneficiaries as the trustee deems appropriate. The trust will terminate at the end of nine years, and the property will pass to George's children. Which of the following statements is correct?

Accepted Answer

A)  The beneficiaries receive a present interest in the trust property when George transfers the assets to the trust. 
B)  The transfer by George is eligible for the annual gift tax exclusion. 
C)  George's transfer of property to the trust is not taxed under gift tax rules at the date of transfer. 
D)  George's transfer of property to the trust is a gift of a future interest. 
A)  The beneficiaries receive a present interest in the trust property when George transfers the assets to the trust. 
B)  The transfer by George is eligible for the annual gift tax exclusion. 
C)  George's transfer of property to the trust is not taxed under gift tax rules at the date of transfer. 
D)  George's transfer of property to the trust is a gift of a future interest.

Question 15

Identify which of the following statements is false.

Accepted Answer

A)  The gift-splitting election will apply to all transfers made during the portion of any year that the spouses electing gift splitting are married to each other. 
B)  The gift-splitting election is made separately on each gift either spouse makes. 
C)  Making gifts during one's lifetime helps to reduce the amount of estate taxes owed at death. 
D)  In order to use gift splitting, both spouses must be U.S. citizens or residents at the time of the transfer. 
A)  The gift-splitting election will apply to all transfers made during the portion of any year that the spouses electing gift splitting are married to each other. 
B)  The gift-splitting election is made separately on each gift either spouse makes. 
C)  Making gifts during one's lifetime helps to reduce the amount of estate taxes owed at death. 
D)  In order to use gift splitting, both spouses must be U.S. citizens or residents at the time of the transfer.

Question 16

Discuss at least two reasons for making inter vivos (lifetime) gifts.

Accepted Answer

The $15,000 per donee annual exclusion a

Question 17

In November 1976, Grant uses $30,000 of the specific exemption available at that time. The unified credit available to Grant for post-1976 transfers is reduced by

Accepted Answer

A)  $0. 
B)  $6,000. 
C)  $15,000. 
D)  $30,000. 
A)  $0. 
B)  $6,000. 
C)  $15,000. 
D)  $30,000.

Question 18

Calvin transfers land to a trust. His daughter Melissa will receive the income from the land for ten years. After ten years, the land is returned to Calvin. Calvin's interest is

Accepted Answer

A)  a term certain. 
B)  a life estate. 
C)  a reversionary interest. 
D)  none of the above 
A)  a term certain. 
B)  a life estate. 
C)  a reversionary interest. 
D)  none of the above

Question 19

Yuli wants to help his adult grandson, Jerry, become a CPA. He pays all of Jerry's tuition this year, which totals $20,000. He also pays $9,000 for Jerry's room and board at school. Yuli makes the payments directly to the school. What are the gift tax consequences?

Accepted Answer

IRC Sec. 2503(c) exempts the direct paym

Question 20

In 2013, Lilly makes taxable gifts aggregating $5.25 million. Her only other taxable gifts amount to $1 million, all of which were made in 1998. What is her gift tax liability?

Accepted Answer

Tax on $6,250,000 $2,445,800
Minus: tax

Which of the following transfers is subject to the gift tax?

Bryce pays $40,000 for his adult grandson's tuition at medical school and $18,000 for the grandson's room and board in the medical school's dormitory. All payments are made directly to the medical school. Do these payments by Bryce qualify as gifts?

Discuss the ways in which the estate and gift tax system is a unified system.

Elaine loaned her brother, Mike, $175,000 to purchase a new home. Elaine does not charge Mike any interest on the loan. What are the tax consequences to Elaine and Mike?

Abby transfers $10,000 to a political organization to promote her favorite candidate for president. Does Abby's transfer qualify as a gift?

Which of the following statements is true?

Identify which of the following statements is false.

Contrast the Crummey trust with the Sec. 2503(c) trust.

The annual exclusion permits donors to make gifts of $15,000 each to multiple donees.

What is a "net gift" and what is the potential income tax problem associated with making a net gift?

A qualified disclaimer must be made within nine months after (a) the day the property is transferred, or (b) the day the person receiving the property becomes age 21, whichever is later.

Identify which of the following statements is true.

Identify which of the following statements is false.

Discuss at least two reasons for making inter vivos (lifetime) gifts.

In November 1976, Grant uses $30,000 of the specific exemption available at that time. The unified credit available to Grant for post-1976 transfers is reduced by

Calvin transfers land to a trust. His daughter Melissa will receive the income from the land for ten years. After ten years, the land is returned to Calvin. Calvin's interest is

Yuli wants to help his adult grandson, Jerry, become a CPA. He pays all of Jerry's tuition this year, which totals $20,000. He also pays $9,000 for Jerry's room and board at school. Yuli makes the payments directly to the school. What are the gift tax consequences?

In 2013, Lilly makes taxable gifts aggregating $5.25 million. Her only other taxable gifts amount to $1 million, all of which were made in 1998. What is her gift tax liability?

Tax Research

Corporate Formations and Capital Structure

The Corporate Income Tax

Corporate Nonliquidating Distributions

Other Corporate Tax Levies

Corporate Liquidating Distributions

Corporate Acquisitions and Reorganizations

Consolidated Tax Returns

Partnership Formation and Operation

Special Partnership Issues

S Corporations

The Estate Tax

Income Taxation of Trusts and Estates

Administrative Procedures

Us Taxation of Foreign-Related Transactions

Filters

Exam 12: The Gift Tax

Which of the following transfers is subject to the gift tax?

Bryce pays $40,000 for his adult grandson's tuition at medical school and $18,000 for the grandson's room and board in the medical school's dormitory. All payments are made directly to the medical school. Do these payments by Bryce qualify as gifts?

Discuss the ways in which the estate and gift tax system is a unified system.

Elaine loaned her brother, Mike, $175,000 to purchase a new home. Elaine does not charge Mike any interest on the loan. What are the tax consequences to Elaine and Mike?

Abby transfers $10,000 to a political organization to promote her favorite candidate for president. Does Abby's transfer qualify as a gift?

Which of the following statements is true?

Identify which of the following statements is false.

Contrast the Crummey trust with the Sec. 2503(c) trust.

The annual exclusion permits donors to make gifts of $15,000 each to multiple donees.

What is a "net gift" and what is the potential income tax problem associated with making a net gift?

A qualified disclaimer must be made within nine months after (a) the day the property is transferred, or (b) the day the person receiving the property becomes age 21, whichever is later.

Identify which of the following statements is true.

Identify which of the following statements is false.

Discuss at least two reasons for making inter vivos (lifetime) gifts.

In November 1976, Grant uses $30,000 of the specific exemption available at that time. The unified credit available to Grant for post-1976 transfers is reduced by

Calvin transfers land to a trust. His daughter Melissa will receive the income from the land for ten years. After ten years, the land is returned to Calvin. Calvin's interest is

Yuli wants to help his adult grandson, Jerry, become a CPA. He pays all of Jerry's tuition this year, which totals $20,000. He also pays $9,000 for Jerry's room and board at school. Yuli makes the payments directly to the school. What are the gift tax consequences?

In 2013, Lilly makes taxable gifts aggregating $5.25 million. Her only other taxable gifts amount to $1 million, all of which were made in 1998. What is her gift tax liability?

Tax Research

Corporate Formations and Capital Structure

The Corporate Income Tax

Corporate Nonliquidating Distributions

Other Corporate Tax Levies

Corporate Liquidating Distributions

Corporate Acquisitions and Reorganizations

Consolidated Tax Returns

Partnership Formation and Operation

Special Partnership Issues

S Corporations

The Estate Tax

Income Taxation of Trusts and Estates

Administrative Procedures

Us Taxation of Foreign-Related Transactions

Filters