Exam 12: The Gift Tax

Identify which of the following statements is true.

Identify which of the following statements is false.

Gloria makes the following gifts during the year: $16,000 cash to her son,Andy Stock with a basis of $10,000 and a $31,000 fair market value to her sister,Helen $100,000 to a revocable trust benefiting her nephew,George Land with a basis of $60,000 and a fair market value of $50,000 to the American Cancer Society Before considering the unified credit,what are Gloria's taxable gifts?

On January 1,Jeff loans his friend Patrick $7,000 to buy a used car.Patrick signs a noninterest-bearing demand note.The applicable interest rate is 5%.Which of the following statements is correct?

Identify which of the following statements is false.

On April 1,Martha opens a joint bank account with Ned and deposits $1,000.Ned deposits $500 into the account on April 2.On May 2,Martha withdraws $750.Two days later,Ned withdraws $600.

Which of the following transactions constitutes a completed gift made by Ellen,a widow,in the current year?

Sandra,who is married,creates an irrevocable trust in the amount of $200,000 for her 18-year-old daughter,Kelly.She names the bank as trustee.Before Kelly reaches age 21,the trustee may pay the income to Kelly.Kelly will receive any undistributed assets when she reaches age 21.If Kelly dies before age 21,the assets will be paid to her estate.In addition,Sandra creates an irrevocable trust for her son,Kevin,age 21.He is entitled to withdraw up to $30,000 per year.Sandra contributes $30,000 in the current year.Sandra elects gift splitting with her husband.Her husband makes no gifts in the current year.Sandra's annual exclusions to be claimed on her gift tax return total

Steve gave stock with an adjusted basis of $7,000 and an FMV of $10,000 to Alice.No gift tax was paid.Later,Alice sold the stock for $12,000.The gain Alice will recognize on the sale is

Ed gives Steve land with an adjusted basis of $40,000 and an FMV of $90,000.Ed paid no gift tax.Ed then inherits the same land back from Steve at Steve's death eight months later.At Steve's death,the land is worth $120,000.Ed's basis in the land becomes

The changing of a life insurance policy beneficiary from a spouse to an adult daughter constitutes a gift for transfer tax purposes.

In the current year,Melanie makes two transfers to Peter,her husband.In June,she gives him land valued at $50,000.In December,she transfers $500,000 to a trust with a bank named as trustee.All income must be paid to Peter monthly for life.At Peter's death,the property passes to their children.Compute the maximum marital deduction assuming Melanie makes the appropriate elections.

Calvin transfers land to a trust.Calvin retains the right to the income from the land for the rest of his life.Upon his death,the land is to be transferred to his daughter,Melissa.Calvin's interest is

Identify which of the following statements is true.

In the current year,Donna gives $50,000 cash and $30,000 of stock to Mike.She also gives $40,000 of tax-exempt bonds to Angela.Her husband,Andy,gives $200,000 of land to Angela.Assume the couple elects gift splitting for the current year.Donna's taxable gifts total

Identify which of the following statements is true.

Identify which of the following statements is true.

A gift-splitting election

Identify which of the following statements is false.

Calvin transfers land to a trust.Calvin retains the right to the income from the land for the rest of his life.Upon his death,the land is to be transferred to his daughter,Melissa.Melissa's interest is