Question 1

A Crummey trust

Accepted Answer

A)  prohibits the beneficiary from withdrawing assets. 
B)  allows the donor an annual exclusion for transfers. 
C)  receives property that is not eligible for the annual exclusion. 
D)  provides the donor with the ability to retrieve the property. 
A)  prohibits the beneficiary from withdrawing assets. 
B)  allows the donor an annual exclusion for transfers. 
C)  receives property that is not eligible for the annual exclusion. 
D)  provides the donor with the ability to retrieve the property. B

Question 2

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 contributions do not fall within the statutory definition of a gift.

Question 3

Identify which of the following statements is false.

Accepted Answer

A)  A power of appointment exists when a person transfers property and grants someone else the power to specify who eventually will receive the property. 
B)  The donor must recognize as a gain the excess of the gift tax payable over the adjusted basis of the property. 
C)  The donee's payment of the gift tax does not reduce the amount of the gift because it is treated as consideration paid to the donor. 
D)  A person possesses a general power of appointment if the person has the power to appoint property to himself, his creditors, his estate, or the creditors of his estate. 
A)  A power of appointment exists when a person transfers property and grants someone else the power to specify who eventually will receive the property. 
B)  The donor must recognize as a gain the excess of the gift tax payable over the adjusted basis of the property. 
C)  The donee's payment of the gift tax does not reduce the amount of the gift because it is treated as consideration paid to the donor. 
D)  A person possesses a general power of appointment if the person has the power to appoint property to himself, his creditors, his estate, or the creditors of his estate. C

Question 4

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

Accepted Answer

A)  $1,000 loss. 
B)  $1,000 gain. 
C)  $2,000 gain. 
D)  none of the above 
A)  $1,000 loss. 
B)  $1,000 gain. 
C)  $2,000 gain. 
D)  none of the above

Question 5

Discuss the negative aspects of gifts.

Accepted Answer

The donor loses complete control of the

Question 6

Gift tax returns are filed on a calendar- year basis.

Accepted Answer

A) True 
 B)False

Question 7

On June 1, Sherri deposits $60,000 into a new joint bank account in the names of Sherri and John. Her friend John makes no deposits. On December 15th, John withdraws $25,000 from the joint account. What are the gift tax consequences, if any?

Accepted Answer

No gift arises upon the creation of the

Question 8

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

Accepted Answer

A)  $110,000. 
B)  $60,000. 
C)  $130,000. 
D)  $148,000. 
A)  $110,000. 
B)  $60,000. 
C)  $130,000. 
D)  $148,000.

Question 9

Which of the following statements is true?

Accepted Answer

A)  If the donor retains the power to change the trust beneficiary, the gift is complete. 
B)  Transfers to an irrevocable trust can be deemed incomplete due to powers retained by the grantor. 
C)  Transfers to a revocable trust are completed gifts. 
D)  All of the above are false. 
A)  If the donor retains the power to change the trust beneficiary, the gift is complete. 
B)  Transfers to an irrevocable trust can be deemed incomplete due to powers retained by the grantor. 
C)  Transfers to a revocable trust are completed gifts. 
D)  All of the above are false.

Question 10

What are the requirements for classifying a transaction as a transfer of a qualified terminable interest property (QTIP)?

Accepted Answer

The requirements for a qualified termina

Question 11

Karen purchased a beach house for $300,000 and immediately titled it in the names of Karen and Kenny, as joint tenants with right of survivorship. Karen and Kenny are not married. Did a gift occur? If so, for what amount?

Accepted Answer

Yes, a gift of one-

Question 12

Jack transfers property worth $250,000 to a revocable trust on January 1. Two- and- a- half years later, when the property is worth $300,000, the trust becomes irrevocable. Which of the following statements is correct?

Accepted Answer

A)  A $300,000 gift occurs when the trust became irrevocable. 
B)  A $250,000 gift occurs when the trust became irrevocable. 
C)  A $250,000 gift occurs when the original transfer was made. 
D)  Jack may elect which amount to report as a gift. 
A)  A $300,000 gift occurs when the trust became irrevocable. 
B)  A $250,000 gift occurs when the trust became irrevocable. 
C)  A $250,000 gift occurs when the original transfer was made. 
D)  Jack may elect which amount to report as a gift.

Question 13

Gordon died on January 1 and by his will left land with an adjusted basis of $60,000 and an FMV of $100,000 to Becky. Becky disclaims the property on December 31 of the year of death, when the land was still worth $100,000. Becky has made a gift (before the annual gift tax exclusion) of

Accepted Answer

A)  $60,000. 
B)  $100,000. 
C)  $50,000. 
D)  $0. 
A)  $60,000. 
B)  $100,000. 
C)  $50,000. 
D)  $0.

Question 14

Miguel gives Roberta land with an adjusted basis of $50,000 and an FMV of $40,000. No gift tax is paid. Roberta sells the land for $36,000. Roberta recognizes

Accepted Answer

A)  a $4,000 loss. 
B)  a $14,000 loss. 
C)  no loss. 
D)  none of the above 
A)  a $4,000 loss. 
B)  a $14,000 loss. 
C)  no loss. 
D)  none of the above

Question 15

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

Question 16

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

Accepted Answer

A)  $30,000. 
B)  $12,000. 
C)  $15,500. 
D)  $0. 
A)  $30,000. 
B)  $12,000. 
C)  $15,500. 
D)  $0.

Question 17

Identify which of the following statements is true.

Accepted Answer

A)  An individual can inadvertently make a gift by underestimating a property's fair market value and selling it to a relative for a price below its fair market value. 
B)  The statutory exemption from the gift tax for payments for medical care requires that the payment be made for a relative. 
C)  A taxable gift may occur when property is sold in an arm's length transaction for less than its FMV. 
D)  All of the above are false. 
A)  An individual can inadvertently make a gift by underestimating a property's fair market value and selling it to a relative for a price below its fair market value. 
B)  The statutory exemption from the gift tax for payments for medical care requires that the payment be made for a relative. 
C)  A taxable gift may occur when property is sold in an arm's length transaction for less than its FMV. 
D)  All of the above are false.

Question 18

A "Crummey demand power" in a trust document allows the donor to demand a distribution from the trust in years in which earnings exist within the trust.

Accepted Answer

A) True 
 B)False

Question 19

Interest- free or below- market loans

Accepted Answer

A)  result in treating the entire loan proceeds as a gift. 
B)  may result in treating the borrower as paying interest. 
C)  will always result in at least $1,000 of interest income being imputed. 
D)  must always have interest imputed on them. 
A)  result in treating the entire loan proceeds as a gift. 
B)  may result in treating the borrower as paying interest. 
C)  will always result in at least $1,000 of interest income being imputed. 
D)  must always have interest imputed on them.

Question 20

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

Accepted Answer

A)  $0. 
B)  $2,000. 
C)  $5,000. 
D)  none of the above 
A)  $0. 
B)  $2,000. 
C)  $5,000. 
D)  none of the above

A Crummey trust

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

Identify which of the following statements is false.

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

Discuss the negative aspects of gifts.

Gift tax returns are filed on a calendar- year basis.

On June 1, Sherri deposits $60,000 into a new joint bank account in the names of Sherri and John. Her friend John makes no deposits. On December 15th, John withdraws $25,000 from the joint account. What are the gift tax consequences, if any?

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

Which of the following statements is true?

What are the requirements for classifying a transaction as a transfer of a qualified terminable interest property (QTIP)?

Karen purchased a beach house for $300,000 and immediately titled it in the names of Karen and Kenny, as joint tenants with right of survivorship. Karen and Kenny are not married. Did a gift occur? If so, for what amount?

Jack transfers property worth $250,000 to a revocable trust on January 1. Two- and- a- half years later, when the property is worth $300,000, the trust becomes irrevocable. Which of the following statements is correct?

Gordon died on January 1 and by his will left land with an adjusted basis of $60,000 and an FMV of $100,000 to Becky. Becky disclaims the property on December 31 of the year of death, when the land was still worth $100,000. Becky has made a gift (before the annual gift tax exclusion) of

Miguel gives Roberta land with an adjusted basis of $50,000 and an FMV of $40,000. No gift tax is paid. Roberta sells the land for $36,000. Roberta recognizes

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

Identify which of the following statements is true.

A "Crummey demand power" in a trust document allows the donor to demand a distribution from the trust in years in which earnings exist within the trust.

Interest- free or below- market loans

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

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

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U.S. Taxation of Foreign-Related Transactions

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Exam 12: The Gift Tax

A Crummey trust

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

Identify which of the following statements is false.

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

Discuss the negative aspects of gifts.

Gift tax returns are filed on a calendar- year basis.

On June 1, Sherri deposits $60,000 into a new joint bank account in the names of Sherri and John. Her friend John makes no deposits. On December 15th, John withdraws $25,000 from the joint account. What are the gift tax consequences, if any?

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

Which of the following statements is true?

What are the requirements for classifying a transaction as a transfer of a qualified terminable interest property (QTIP)?

Karen purchased a beach house for $300,000 and immediately titled it in the names of Karen and Kenny, as joint tenants with right of survivorship. Karen and Kenny are not married. Did a gift occur? If so, for what amount?

Jack transfers property worth $250,000 to a revocable trust on January 1. Two- and- a- half years later, when the property is worth $300,000, the trust becomes irrevocable. Which of the following statements is correct?

Gordon died on January 1 and by his will left land with an adjusted basis of $60,000 and an FMV of $100,000 to Becky. Becky disclaims the property on December 31 of the year of death, when the land was still worth $100,000. Becky has made a gift (before the annual gift tax exclusion) of

Miguel gives Roberta land with an adjusted basis of $50,000 and an FMV of $40,000. No gift tax is paid. Roberta sells the land for $36,000. Roberta recognizes

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

Identify which of the following statements is true.

A "Crummey demand power" in a trust document allows the donor to demand a distribution from the trust in years in which earnings exist within the trust.

Interest- free or below- market loans

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

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

U.S. Taxation of Foreign-Related Transactions

Filters