Question 1

Identify which of the following statements is false.

Accepted Answer

A)  Life estates are valued using actuarial tables. 
B)  If an individual transfers property in trust and reserves the right to the trust's income for life, the individual retains a life estate. 
C)  If a grantor transfers property in trust and names a beneficiary to receive only a term- certain interest and then the property is to return to the grantor, the transaction is not subject to gift tax. 
D)  An individual who receives a remainder interest will receive property after the death of the holder of a life estate. 
A)  Life estates are valued using actuarial tables. 
B)  If an individual transfers property in trust and reserves the right to the trust's income for life, the individual retains a life estate. 
C)  If a grantor transfers property in trust and names a beneficiary to receive only a term- certain interest and then the property is to return to the grantor, the transaction is not subject to gift tax. 
D)  An individual who receives a remainder interest will receive property after the death of the holder of a life estate.

Question 2

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.

Accepted Answer

A) True 
 B)False

Question 3

Identify which of the following statements is true.

Accepted Answer

A)  Prospective donors should not dispose of property that has declined in value by selling it rather than gifting it. 
B)  If the gifted property's FMV on the date of the gift exceeds its adjusted basis and the donor pays no gift tax, the donee's basis is the same as the donor's basis if the property is sold for a loss. 
C)  A $15,000 annual exclusion per donee is available for both gift tax and estate tax purposes. 
D)  All of the above are false. 
A)  Prospective donors should not dispose of property that has declined in value by selling it rather than gifting it. 
B)  If the gifted property's FMV on the date of the gift exceeds its adjusted basis and the donor pays no gift tax, the donee's basis is the same as the donor's basis if the property is sold for a loss. 
C)  A $15,000 annual exclusion per donee is available for both gift tax and estate tax purposes. 
D)  All of the above are false.

Question 4

Connie has some acreage that is valued at $1,500,000. Her daughter would like to build a home on it, but can only afford $500,000. Connie agrees to sell it to her daughter for $500,000. Is there any gift tax consequence as a result of this transaction?

Accepted Answer

Connie is considered to have made a gift

Question 5

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 6

Identify which of the following statements is false.

Accepted Answer

A)  A gift occurs when the owner of an insurance policy irrevocably assigns all ownership rights in the policy to another. 
B)  The value of the gift of a life insurance policy is the amount it would cost to purchase a comparable policy on the date of the gift. 
C)  The payment of premiums on an insurance policy that is owned by another does not constitute a gift. 
D)  The interpolated terminal reserve is similar to a life insurance policy's cash surrender value. 
A)  A gift occurs when the owner of an insurance policy irrevocably assigns all ownership rights in the policy to another. 
B)  The value of the gift of a life insurance policy is the amount it would cost to purchase a comparable policy on the date of the gift. 
C)  The payment of premiums on an insurance policy that is owned by another does not constitute a gift. 
D)  The interpolated terminal reserve is similar to a life insurance policy's cash surrender value.

Question 7

Ward and June decide to divorce after 30 years of marriage. Ward transfers $500,000 to June in settlement of her property rights. What are the gift tax consequences of this transfer?

Accepted Answer

Ward is not deemed t

Question 8

A split- interest gift transfer

Accepted Answer

A)  cannot qualify for a deduction if a future interest is given to a charitable organization. 
B)  involves two public (charitable) organizations. 
C)  qualifies for a charitable contribution deduction if the recipient charity receives a guaranteed annuity, which is a present interest. 
D)  involves two present interests. 
A)  cannot qualify for a deduction if a future interest is given to a charitable organization. 
B)  involves two public (charitable) organizations. 
C)  qualifies for a charitable contribution deduction if the recipient charity receives a guaranteed annuity, which is a present interest. 
D)  involves two present interests.

Question 9

Jennifer and Terry, a married couple, live in Illinois; which is a common law state. In the current year, Terry gives his sister $200,000 cash. Jennifer and Terry agree to gift splitting. Neither Jennifer nor Terry has made any taxable gifts in prior years. What are Jennifer and Terry's taxable gifts?

Accepted Answer

Since they elect gift splitting, each sp

Question 10

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

Accepted Answer

A) True 
 B)False

Question 11

Marilyn and Earl establish a trust benefiting their grandchild, Courtney, age 4. Courtney is to receive the accumulated income and corpus when she reaches age 30. In the year of the transfer, Courtney has a two- week period in which to request distributions. This trust is a

Accepted Answer

A)  Clifford trust. 
B)  2503(c) trust. 
C)  Crummey trust. 
D)  none of the above 
A)  Clifford trust. 
B)  2503(c) trust. 
C)  Crummey trust. 
D)  none of the above

Question 12

Identify which of the following statements is true.

Accepted Answer

A)  A present interest is an unrestricted right to the immediate use, possession, or enjoyment of property or the income from property. 
B)  The gift tax exclusion is available only for a gift of a present interest. 
C)  A purpose of the annual exclusion is to eliminate the necessity of accounting for and reporting small gifts such as those made for weddings and Christmas. 
D)  All of the above are true. 
A)  A present interest is an unrestricted right to the immediate use, possession, or enjoyment of property or the income from property. 
B)  The gift tax exclusion is available only for a gift of a present interest. 
C)  A purpose of the annual exclusion is to eliminate the necessity of accounting for and reporting small gifts such as those made for weddings and Christmas. 
D)  All of the above are true.

Question 13

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

Accepted Answer

A)  a remainder interest. 
B)  a reversionary interest. 
C)  a term certain. 
D)  a life estate. 
A)  a remainder interest. 
B)  a reversionary interest. 
C)  a term certain. 
D)  a life estate.

Question 14

A gift- splitting election

Accepted Answer

A)  is binding on future years. 
B)  results in a $7,500 per donee annual exclusion for each spouse. 
C)  may reduce the amount of the taxable gifts of the donor- decedent. 
D)  requires each spouse to give property. 
A)  is binding on future years. 
B)  results in a $7,500 per donee annual exclusion for each spouse. 
C)  may reduce the amount of the taxable gifts of the donor- decedent. 
D)  requires each spouse to give property.

Question 15

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?

Accepted Answer

A)  Jeff must report interest income of $3,500 from Patrick. 
B)  Interest does not have to be imputed on the gift since the loan amount is less than $10,000 and does not have a tax avoidance motive. 
C)  Jeff has made a taxable gift to Patrick of $3,500. 
D)  Jeff has made a gift to Patrick that is not taxable since it is less than $11,000. 
A)  Jeff must report interest income of $3,500 from Patrick. 
B)  Interest does not have to be imputed on the gift since the loan amount is less than $10,000 and does not have a tax avoidance motive. 
C)  Jeff has made a taxable gift to Patrick of $3,500. 
D)  Jeff has made a gift to Patrick that is not taxable since it is less than $11,000.

Question 16

A husband transfers $90,000 by gift directly to his wife. The marital deduction for the transfer is

Accepted Answer

A)  $75,000. 
B)  $0 unless he elects to claim one. 
C)  $90,000. 
D)  none of the above 
A)  $75,000. 
B)  $0 unless he elects to claim one. 
C)  $90,000. 
D)  none of the above

Question 17

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 18

In the current year, Martha makes the transfers below to her husband, Ryan. What is the amount, if any, of her m deduction?
a) In August, she gives him a house valued at $250,000.
b) In December, she gives him a 15- year income interest in a trust with the bank name as trustee. She names he son as the remainderman. The trust is irrevocable and is funded with $500,000 of assets, and 8% is the
applicable interest rate.

Accepted Answer

a) The marital deduction is $235,000 ($2

Question 19

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

Question 20

Why are Crummey trusts popular for minors?

Accepted Answer

A)  They are considered gifts of a future interest and allow the donor to take an exclusion. 
B)  They are considered gifts of a present interest, permitting an annual gift tax exclusion. 
C)  Donors are only subject to the gift tax when funds are distributed from Crummey trusts. 
D)  Crummey trusts require annual distributions to minors. 
A)  They are considered gifts of a future interest and allow the donor to take an exclusion. 
B)  They are considered gifts of a present interest, permitting an annual gift tax exclusion. 
C)  Donors are only subject to the gift tax when funds are distributed from Crummey trusts. 
D)  Crummey trusts require annual distributions to minors.

Identify which of the following statements is false.

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.

Identify which of the following statements is true.

Connie has some acreage that is valued at $1,500,000. Her daughter would like to build a home on it, but can only afford $500,000. Connie agrees to sell it to her daughter for $500,000. Is there any gift tax consequence as a result of this transaction?

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

Identify which of the following statements is false.

Ward and June decide to divorce after 30 years of marriage. Ward transfers $500,000 to June in settlement of her property rights. What are the gift tax consequences of this transfer?

A split- interest gift transfer

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

Marilyn and Earl establish a trust benefiting their grandchild, Courtney, age 4. Courtney is to receive the accumulated income and corpus when she reaches age 30. In the year of the transfer, Courtney has a two- week period in which to request distributions. This trust is a

Identify which of the following statements is true.

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

A gift- splitting election

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?

A husband transfers $90,000 by gift directly to his wife. The marital deduction for the transfer is

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?

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?

Why are Crummey trusts popular for minors?

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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

Identify which of the following statements is false.

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.

Identify which of the following statements is true.

Connie has some acreage that is valued at $1,500,000. Her daughter would like to build a home on it, but can only afford $500,000. Connie agrees to sell it to her daughter for $500,000. Is there any gift tax consequence as a result of this transaction?

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

Identify which of the following statements is false.

Ward and June decide to divorce after 30 years of marriage. Ward transfers $500,000 to June in settlement of her property rights. What are the gift tax consequences of this transfer?

A split- interest gift transfer

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

Marilyn and Earl establish a trust benefiting their grandchild, Courtney, age 4. Courtney is to receive the accumulated income and corpus when she reaches age 30. In the year of the transfer, Courtney has a two- week period in which to request distributions. This trust is a

Identify which of the following statements is true.

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

A gift- splitting election

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?

A husband transfers $90,000 by gift directly to his wife. The marital deduction for the transfer is

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?

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?

Why are Crummey trusts popular for minors?

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