Exam 12: The Gift Tax

Mia makes a taxable gift when she makes her mother a joint owner on Mia's bank account. Mia has$25,000 in the account.

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

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

Donna transfers $200,000 of property to an irrevocable trust with a bank as trustee. Donna names Toby (age 60) to receive all of the trust income for the rest of his life. At Toby's death, the property is to pass to Al or Al's estate. What kind of interest do Toby and Al possess?

The gift tax is a wealth transfer tax that applies to transfers during a person's lifetime and transfers at death.

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

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?

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

On March 1, Bruce transfers $300,000 to a revocable trust with Sprint Bank as trustee. The trustee must pay out all the income to Sam during Sam's lifetime. At Sam's death, the property is to be paid to Sam Jr. On December 31, the trustee distributes $40,000 of income to Sam. What date did a gift occur? What was the amount of the gift?

Identify which of the following statements is true.

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.

Roger makes a $1,000,000 cash gift on January 1 of the current year, and dies on February 1 of the current year. Roger's gift tax return is due

In the current year, Cesar, who is single, gives $26,000 to each of his 20 nieces and nephews for a total property transfer of $520,000. Cesar's taxable gifts total A) $300,000. B) $520,000. C) $260,000. D) $220,000.

Which of the following statements is true?

Ida sells some stock to Mae for $20,000 at a time when the stock is valued at $50,000. Later in the year, she gives $16,000 in cash. a) What is the amount of Ida's taxable gifts? b) How would your answer to Part (a) change if Ida gave the cash to Jonathan instead of to Mae?

The computation of the gift tax liability for a current year

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.

Identify which of the following statements is false.