Question 1

What is the benefit(s) of a living trust?

Accepted Answer

A) Keeps assets in the trust out of the gross estate. 
B) Keeps assets in the trust out of the probate estate. 
C) Maintains privacy for the beneficiaries. 
D) Both (b) and (c). 
A) Keeps assets in the trust out of the gross estate. 
B) Keeps assets in the trust out of the probate estate. 
C) Maintains privacy for the beneficiaries. 
D) Both (b) and (c).

Question 2

What is the limit on the amount of property that can be transferred to a spouse free of any transfer taxes?

Accepted Answer

A) $15,000 per year 
B) $1,000,000 
C) An unlimited amount 
D) All transfers to a spouse are subject to transfer taxes 
A) $15,000 per year 
B) $1,000,000 
C) An unlimited amount 
D) All transfers to a spouse are subject to transfer taxes

Question 3

Only gift taxes of a present interest in property are eligible for the unified credit.

Accepted Answer

A) True 
 B)False

Question 4

Payment to a college for a grandchild's tuition is not a taxable gift.

Accepted Answer

A) True 
 B)False

Question 5

Charles gave his three grandsons $20,000 each, his friend, Joe, $15,000, and his daughter $32,000.His second wife, Marla, gave her three children $52,000 each and $50,000 to her church.What are Charles and Marla's taxable gifts if they elect gift splitting?

Accepted Answer

A) $68,000 
B) $90,000 
C) $145,000 
D) $193,000 
A) $68,000 
B) $90,000 
C) $145,000 
D) $193,000

Question 6

Which of the following would not be income in respect of a decedent who dies on January 4?

Accepted Answer

A) Interest credited a savings account on January 2 but not withdrawn. 
B) A dividend declared on December 31 payable on January 15. 
C) Salary payable on January 10. 
D) $30,000 in the decedent's 401-K plan. 
A) Interest credited a savings account on January 2 but not withdrawn. 
B) A dividend declared on December 31 payable on January 15. 
C) Salary payable on January 10. 
D) $30,000 in the decedent's 401-K plan.

Question 7

The widow of a decedent may add the decedent's remaining lifetime exclusion to her lifetime exclusion only if the estate executor makes an irrevocable election.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following gifts is not eligible for the annual exclusion?

Accepted Answer

A) $20,000 given to a spouse 
B) The remainder interest in a trust 
C) $100,000 given to North Carolina State University. 
D) All are eligible for the annual exclusion. 
A) $20,000 given to a spouse 
B) The remainder interest in a trust 
C) $100,000 given to North Carolina State University. 
D) All are eligible for the annual exclusion.

Question 9

The federal gift tax is:

Accepted Answer

A) imposed upon the recipient of gifts 
B) imposed upon property in the estate of a deceased person 
C) imposed upon the donor on lifetime gift transfers 
D) imposed upon the donee only if a gift is not subject to income taxes 
A) imposed upon the recipient of gifts 
B) imposed upon property in the estate of a deceased person 
C) imposed upon the donor on lifetime gift transfers 
D) imposed upon the donee only if a gift is not subject to income taxes

Question 10

The gift tax

Accepted Answer

A) can apply to tuition paid directly to a school by an unrelated party. 
B) is not levied when setting up a revocable trust. 
C) applies to property transfers between divorcing parties. 
D) Both (a) and (c). 
A) can apply to tuition paid directly to a school by an unrelated party. 
B) is not levied when setting up a revocable trust. 
C) applies to property transfers between divorcing parties. 
D) Both (a) and (c).

Question 11

William set up a trust for his parents.Each parent is to receive one-half of the income for his or her lifetime; when one parent dies, all income is to go to the surviving parent.When the other parent dies, the remainder is to go to William.This trust is

Accepted Answer

A) A revocable trust. 
B) An irrevocable trust. 
C) A grantor trust. 
D) A complex trust. 
A) A revocable trust. 
B) An irrevocable trust. 
C) A grantor trust. 
D) A complex trust.

Question 12

When comparing lifetime transfers to testamentary transfers, which of the following would be preferable as a testamentary transfer?

Accepted Answer

A) The property to be transferred has declined in value. 
B) The property has increased in value. 
C) The property is an insurance policy on the life of the transferor. 
D) The property transferred is transferred to a qualified charity. 
A) The property to be transferred has declined in value. 
B) The property has increased in value. 
C) The property is an insurance policy on the life of the transferor. 
D) The property transferred is transferred to a qualified charity.

Question 13

Crystal deposited $50,000 into a joint savings account in her name and the name of her son, Jason.Later that same year, Jason withdrew $16,000 from the account.If Crystal made no other gifts to Jason during that year, what is the value of Crystal's taxable gifts (before applying the unified credit)?

Accepted Answer

A) $1,000 
B) $12,000 
C) $16,000 
D) $25,000 
A) $1,000 
B) $12,000 
C) $16,000 
D) $25,000

Question 14

Which of the following does not apply to the estate tax in effect in 2019?

Accepted Answer

A) The tax is assessed on the adjusted basis of the decedent's estate. 
B) Taxable gifts are integrated with the estate value to determine the estate tax. 
C) The gift and estate tax rate schedules are the same. 
D) The unified credit applies to gifts and estates. 
A) The tax is assessed on the adjusted basis of the decedent's estate. 
B) Taxable gifts are integrated with the estate value to determine the estate tax. 
C) The gift and estate tax rate schedules are the same. 
D) The unified credit applies to gifts and estates.

Question 15

Giving appreciating property away reduces the potential lifetime transfer tax for an estate.

Accepted Answer

A) True 
 B)False

Question 16

Silvia has three grandchildren.What is the maximum amount that she can contribute this year to a Section 529 education plan without incurring a gift tax?

Accepted Answer

A) $14,000 
B) $42,000 
C) $70,000 
D) $225,000 
A) $14,000 
B) $42,000 
C) $70,000 
D) $225,000

Question 17

Cheryl bought some stock for $110,000.Two years later, she gave the stock to her brother, Harold, when its value was $100,000.Three years later, Harold sold the stock for $105,000.What is the value of the gift to Harold, and his gain or loss on the sale, respectively?

Accepted Answer

A) $100,000; 0 gain/loss 
B) $100,000; $5,000 gain 
C) $110,000; 0 gain/loss 
D) $110,000; $5,000 loss 
A) $100,000; 0 gain/loss 
B) $100,000; $5,000 gain 
C) $110,000; 0 gain/loss 
D) $110,000; $5,000 loss

Question 18

The donor of a trust is the same as

Accepted Answer

A) the beneficiary. 
B) the trustee. 
C) the grantor. 
D) the fiduciary. 
A) the beneficiary. 
B) the trustee. 
C) the grantor. 
D) the fiduciary.

Question 19

A taxpayer must not retain any incidents of ownership in a life insurance policy on his or her life to have it excluded from his or her taxable estate.

Accepted Answer

A) True 
 B)False

Question 20

Which of the following is not an advantage of lifetime gifts?

Accepted Answer

A) The annual exclusion can shield thousands of dollars from taxation. 
B) Property appreciation does not enter the estate tax calculation. 
C) A stepped-up basis is secured for appreciated gifts. 
D) Gift-splitting allows spouses to combine their annual exclusions 
A) The annual exclusion can shield thousands of dollars from taxation. 
B) Property appreciation does not enter the estate tax calculation. 
C) A stepped-up basis is secured for appreciated gifts. 
D) Gift-splitting allows spouses to combine their annual exclusions

What is the benefit(s) of a living trust?

What is the limit on the amount of property that can be transferred to a spouse free of any transfer taxes?

Only gift taxes of a present interest in property are eligible for the unified credit.

Payment to a college for a grandchild's tuition is not a taxable gift.

Charles gave his three grandsons $20,000 each, his friend, Joe, $15,000, and his daughter $32,000.His second wife, Marla, gave her three children $52,000 each and $50,000 to her church.What are Charles and Marla's taxable gifts if they elect gift splitting?

Which of the following would not be income in respect of a decedent who dies on January 4?

The widow of a decedent may add the decedent's remaining lifetime exclusion to her lifetime exclusion only if the estate executor makes an irrevocable election.

Which of the following gifts is not eligible for the annual exclusion?

The federal gift tax is:

The gift tax

William set up a trust for his parents.Each parent is to receive one-half of the income for his or her lifetime; when one parent dies, all income is to go to the surviving parent.When the other parent dies, the remainder is to go to William.This trust is

When comparing lifetime transfers to testamentary transfers, which of the following would be preferable as a testamentary transfer?

Crystal deposited $50,000 into a joint savings account in her name and the name of her son, Jason.Later that same year, Jason withdrew $16,000 from the account.If Crystal made no other gifts to Jason during that year, what is the value of Crystal's taxable gifts (before applying the unified credit)?

Which of the following does not apply to the estate tax in effect in 2019?

Giving appreciating property away reduces the potential lifetime transfer tax for an estate.

Silvia has three grandchildren.What is the maximum amount that she can contribute this year to a Section 529 education plan without incurring a gift tax?

Cheryl bought some stock for $110,000.Two years later, she gave the stock to her brother, Harold, when its value was $100,000.Three years later, Harold sold the stock for $105,000.What is the value of the gift to Harold, and his gain or loss on the sale, respectively?

The donor of a trust is the same as

A taxpayer must not retain any incidents of ownership in a life insurance policy on his or her life to have it excluded from his or her taxable estate.

Which of the following is not an advantage of lifetime gifts?

Introduction to Taxation

The Tax Practice Environment

Determining Gross Income

Employee Compensation

Deductions for Individuals and Tax Determination

Business Expenses

Property Acquisitions and Cost Recovery Deductions

Property Dispositions

Tax-Deferred Exchanges

Taxation of Corporations

Sole Proprietorships and Flow-Through Entities

Filters

Exam 12: Estates, Gifts, and Trusts

What is the benefit(s) of a living trust?

What is the limit on the amount of property that can be transferred to a spouse free of any transfer taxes?

Only gift taxes of a present interest in property are eligible for the unified credit.

Payment to a college for a grandchild's tuition is not a taxable gift.

Charles gave his three grandsons $20,000 each, his friend, Joe, $15,000, and his daughter $32,000.His second wife, Marla, gave her three children $52,000 each and $50,000 to her church.What are Charles and Marla's taxable gifts if they elect gift splitting?

Which of the following would not be income in respect of a decedent who dies on January 4?

The widow of a decedent may add the decedent's remaining lifetime exclusion to her lifetime exclusion only if the estate executor makes an irrevocable election.

Which of the following gifts is not eligible for the annual exclusion?

The federal gift tax is:

The gift tax

William set up a trust for his parents.Each parent is to receive one-half of the income for his or her lifetime; when one parent dies, all income is to go to the surviving parent.When the other parent dies, the remainder is to go to William.This trust is

When comparing lifetime transfers to testamentary transfers, which of the following would be preferable as a testamentary transfer?

Which of the following does not apply to the estate tax in effect in 2019?

Giving appreciating property away reduces the potential lifetime transfer tax for an estate.

Silvia has three grandchildren.What is the maximum amount that she can contribute this year to a Section 529 education plan without incurring a gift tax?

Cheryl bought some stock for $110,000.Two years later, she gave the stock to her brother, Harold, when its value was $100,000.Three years later, Harold sold the stock for $105,000.What is the value of the gift to Harold, and his gain or loss on the sale, respectively?

The donor of a trust is the same as

A taxpayer must not retain any incidents of ownership in a life insurance policy on his or her life to have it excluded from his or her taxable estate.

Which of the following is not an advantage of lifetime gifts?

Introduction to Taxation

The Tax Practice Environment

Determining Gross Income

Employee Compensation

Deductions for Individuals and Tax Determination

Business Expenses

Property Acquisitions and Cost Recovery Deductions

Property Dispositions

Tax-Deferred Exchanges

Taxation of Corporations

Sole Proprietorships and Flow-Through Entities

Filters