Exam 12: Estates, Gifts, and Trusts

Clarice, age 90, has accumulated $1.5 million in net assets.Included in this are three blocks of stock: Stock A has a basis of $300,000 and a fair market value of $400,000; Stock B has a basis of $400,000 and a fair market value of $200,000; Stock C has a basis of $100,000 and a fair market value of 400,000.Clarice needs $200,000 now to pay off the mortgage on her daughter's home and she wants to make a $400,000 donation to her Church either as a lifetime or testamentary transfer.Which assets should she sell to accomplish this with the least current tax cost?

Gifts are valued at their fair market value on the date of the gift and the donee takes this fair market value as basis.

The basic deduction allowed on an estate income tax return is

The unified credit for 2019 gifts is equivalent to an exemption amount of:

A fiduciary tax return must be filed for

All of the following apply to the Coverdell education savings account except:

In 2019, Bill and his wife, Helen, made the following gifts: Bill's gifts: $50,000 to each of his five children; $30,000 to each of his six grandchildren; $100,000 to Central Hospital for his nephew's hospital bill.Helen's gifts: $100,000 to each of her two children; $50,000 to each of her three grandchildren; $200,000 a state senator's reelection campaign. What are Bill's and Helen's respective taxable gifts (before their unified credit) if they do not elect gift splitting.

John made $3,400,000 in taxable gifts prior to his death at the beginning of 2019.His wife, Lola, is the executor of John's estate, and made taxable gifts of $800,000 prior to 2019.What is the maximum amount of taxable lifetime gifts that Lola can make in 2019 before she will have to begin paying a gift tax?

All of the following are deductions from the gross estate except

In 2019, Bill and his wife, Helen, made the following gifts: Bill's gifts: $50,000 to each of his five children; $30,000 to each of his six grandchildren; $100,000 to Central Hospital for his nephew's hospital bill.Helen's gifts: $100,000 to each of her two children; $50,000 to each of her three grandchildren; $200,000 a state senator's reelection campaign. What are Bill's and Helen's respective taxable gifts (before their unified credit) if they elect gift splitting.

A simple calendar-year trust has one income beneficiary, Juliana.The trust has accounting income of $40,000 and DNI of $28,000 for 2019.Included in DNI is $9,000 of net tax-exempt income.Juliana received a distribution from the trust of $40,000 in 2019.How much of the distribution must Juliana included in her taxable income for 2019?

Gifts to most charities are not subject to gift taxes.

Putting cash into a joint bank account is a gift to the joint tenant when deposited.

An income tax return for a fiduciary uses the same income tax rate schedule as an individual filing a separate return.

At the time Karen left for college, her grandfather loaned her $100,000 to be used to pay for her college expenses.She signed a note stating that she would begin repaying the loan over 10 years beginning 6 months after graduation.There is no interest specified for the loan.Which of the following is true?

Probate determines the property included in a decedent's taxable estate.

Both gross annual gifts and the gross estate are reduced for

Which of the following statements is true regarding the filing of a gift tax return?

Charles gave his three grandsons $21,000 each, his friend, Joe, $16,000, and his daughter $31,000.His second wife, Marla, gave her three children $51,000 each and $50,000 to her church.What are their combined taxable gifts if they do not elect gift splitting?

Gift splitting allows a married couple to use both their annual exclusions in determining taxable gifts.