Exam 12: The Gift Tax

Hu makes a gift of his home to a local homeless shelter (a 501(c)(3)charity).Hu will retain his home for 10 years,after which the homeless shelter will take possession.The value of Hu's 10-year interest is $30,000 and the remainder interest is valued at $120,000.Which of the following statements is correct?

Which of the following situations requires that a gift tax return be filed?

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

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.

Molly sells her car,valued at $30,000,to her nephew Todd for $18,000.Molly has made a taxable gift.

Virginia gave stock with an adjusted basis of $8,000 and an FMV of $10,000 to Carmen.No gift tax was paid on the transfer.Carmen then sold the stock for $9,000.The gain or loss Carmen will recognize on the sale is

Identify which of the following statements is true.

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

Mike transfers securities to an irrevocable trust and gives Rachel the power to determine who will receive the trust's income and assets.Rachel,her estate,and her creditors cannot be beneficiaries or receive the trust assets.Rachel has a general power of appointment.

A Sec."2503(c)trust"

Which of the following statements is true?

Vincent makes the following property transfers in the current year: • $5,000 tuition for a grandson paid directly to the school • $1,000 medical expense for a child paid directly to a hospital • $500 donation to the Democratic party • $10,000 property settlement in conjunction with a divorce • $3,000 room and board at college for a grandson paid directly to the school Vincent's gifts for the year before considering the annual gift tax exclusion total

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?

Identify which of the following statements is false.

The purchase of a $20,000 engagement ring generates a taxable gift necessitating the filing of a gift tax return.

A net gift occurs when a donor makes a gift subject to the agreement that the recipient agrees to pay the gift tax.

A Crummey trust

Identify which of the following statements is true.

Tracy gave stock with an adjusted basis of $18,000 and an FMV of $15,000 to her nephew Phil.No gift tax was paid.Phil sold the stock for $16,000.The gain or loss Phil will recognize on the sale is

Identify which of the following statements is true.