Question 1

The executor can elect the alternative valuation date only if both the value of the estate and the estate tax are reduced.

Accepted Answer

A) True 
 B)False

Question 2

A fiduciary tax return is filed by

Accepted Answer

A) a trustee. 
B) a grantor. 
C) an executor. 
D) Both (a) and (c). 
A) a trustee. 
B) a grantor. 
C) an executor. 
D) Both (a) and (c).

Question 3

Carl gave his six children gifts of $16,000 each in the current year.

Accepted Answer

A) Carl has made $90,000 of taxable gifts. 
B) Carl has made $6,000 of taxable gifts. 
C) Carl has made no taxable gifts if he and his wife elect gift splitting. 
D) (b) and (c) are both true. 
A) Carl has made $90,000 of taxable gifts. 
B) Carl has made $6,000 of taxable gifts. 
C) Carl has made no taxable gifts if he and his wife elect gift splitting. 
D) (b) and (c) are both true.

Question 4

The kiddie tax applies to all unearned income of a child under 19.

Accepted Answer

A) True 
 B)False

Question 5

Chloe gave $16,000 to her son, $21,000 to her daughter, and paid $18,000 to the University of Delaware for her niece's tuition.She gave $12,000 to the United Way campaign, and $18,000 to her church.What is the amount of Chloe's taxable gifts?

Accepted Answer

A) $ 7,000 
B) $15,000 
C) $35,000 
D) $53,000 
A) $ 7,000 
B) $15,000 
C) $35,000 
D) $53,000

Question 6

Which of the following statements does not apply to a revocable trust?

Accepted Answer

A) The grantor of the trust is taxed on trust income. 
B) The trust property is included in the grantor's gross estate. 
C) Revocable trusts are all simple trusts. 
D) The grantor makes a gift when the trust distributes trust income to a beneficiary. 
A) The grantor of the trust is taxed on trust income. 
B) The trust property is included in the grantor's gross estate. 
C) Revocable trusts are all simple trusts. 
D) The grantor makes a gift when the trust distributes trust income to a beneficiary.

Question 7

A trust that features a demand provision by a beneficiary equal to the annual exclusion is

Accepted Answer

A) an irrevocable trust. 
B) a revocable trust. 
C) a Crummy trust. 
D) a trust established under the UTMA. 
A) an irrevocable trust. 
B) a revocable trust. 
C) a Crummy trust. 
D) a trust established under the UTMA.

Question 8

The amount of the kiddie tax is the sum of

Accepted Answer

A) the child's tax on the child's earned income and the tax on all the child's unearned income at the trust and estate's tax rates. 
B) the trust and estate's tax rate on the child's unearned income and the child's tax on the earned income. 
C) the trust and estate's tax rate on the child's unearned income in excess of $2,200 and the child's tax on the balance of his or her taxable income. 
D) $1,100 or the tax on unearned income. 
A) the child's tax on the child's earned income and the tax on all the child's unearned income at the trust and estate's tax rates. 
B) the trust and estate's tax rate on the child's unearned income and the child's tax on the earned income. 
C) the trust and estate's tax rate on the child's unearned income in excess of $2,200 and the child's tax on the balance of his or her taxable income. 
D) $1,100 or the tax on unearned income.

Question 9

Distributable net income (DNI) is

Accepted Answer

A) Is the maximum taxable distribution to a beneficiary from a trust 
B) Is not taxable to the beneficiaries if it is a distribution of nontaxable income 
C) Is the amount available for distribution from the trust 
D) All are characteristics of DNI 
A) Is the maximum taxable distribution to a beneficiary from a trust 
B) Is not taxable to the beneficiaries if it is a distribution of nontaxable income 
C) Is the amount available for distribution from the trust 
D) All are characteristics of DNI

Question 10

Carey is trustee of the Floyd Family Trust.The trust distributes $20,000 income to George, $10,000 to Linda, and $5,000 to George and Linda's church.The Floyd Family trust is:

Accepted Answer

A) A reversionary trust. 
B) An irreversible trust. 
C) A simple trust. 
D) A complex trust. 
A) A reversionary trust. 
B) An irreversible trust. 
C) A simple trust. 
D) A complex trust.

Question 11

George made a gift of stock valued at $450,000 (basis = $300,000) to his daughter Sally and was required to pay a gift tax of $30,000 on this gift.Which of the following is true regarding this gift?

Accepted Answer

A) Sally has a basis of $300,000 for gain in the stock 
B) Sally has a basis of $310,000 for gain in the stock 
C) Sally has a basis of $330,000 for gain in the stock 
D) Sally has a basis of $450,000 for gain in the stock 
A) Sally has a basis of $300,000 for gain in the stock 
B) Sally has a basis of $310,000 for gain in the stock 
C) Sally has a basis of $330,000 for gain in the stock 
D) Sally has a basis of $450,000 for gain in the stock

Question 12

An income interest in a trust

Accepted Answer

A) must be established for a fixed term in years. 
B) is not eligible for the annual exclusion. 
C) must be irrevocable to be eligible for the annual exclusion. 
D) is irrevocable if the donor only controls who may receive trust income. 
A) must be established for a fixed term in years. 
B) is not eligible for the annual exclusion. 
C) must be irrevocable to be eligible for the annual exclusion. 
D) is irrevocable if the donor only controls who may receive trust income.

Question 13

Glenda, age 8, has $6,150 interest from a trust fund established by her grandfather several years ago.How much of Glenda's income is taxed at the trust and estate's tax rate?

Accepted Answer

A) $6,150 
B) $5,050 
C) $3,950 
D) $1,100 
A) $6,150 
B) $5,050 
C) $3,950 
D) $1,100

Question 14

If two properties are currently of equal value, giving away the property least likely to appreciate would reduce potential estate value.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following is a taxable gift (before applying the unified credit)?

Accepted Answer

A) Christian transfers $5,000 to his friend Crystal 
B) Carmen gives $5,000 in stocks to her church 
C) Yamile gives $30,000 to her husband, Jose. 
D) Jessica transfers $30,000 into an irrevocable trust for the benefit of her two children. 
A) Christian transfers $5,000 to his friend Crystal 
B) Carmen gives $5,000 in stocks to her church 
C) Yamile gives $30,000 to her husband, Jose. 
D) Jessica transfers $30,000 into an irrevocable trust for the benefit of her two children.

Question 16

The following gifts could be subject to the generation skipping transfer tax except:

Accepted Answer

A) A gift from a grandmother to her grandson. 
B) A gift of a great grandfather to his great granddaughter. 
C) A gift from a great uncle to a great niece. 
D) A gift from a grandson to a grandfather. 
A) A gift from a grandmother to her grandson. 
B) A gift of a great grandfather to his great granddaughter. 
C) A gift from a great uncle to a great niece. 
D) A gift from a grandson to a grandfather.

Question 17

In April 2019, Kylie (a calendar-year individual) became a beneficiary of a new calendar-year trust and an estate that elects a January 31 fiscal year-end.During 2019, Kylie received income distributions of $12,000 from the trust and $17,000 from the estate.How much of these distributions is taxable to Kylie on her 2019 Form 1040 tax return?

Accepted Answer

A) $0 
B) $12,000 
C) $17,000 
D) $29,000 
A) $0 
B) $12,000 
C) $17,000 
D) $29,000

Question 18

Which of the following is an advantage to making a lifetime transfer of property to a donee?

Accepted Answer

A) It may receive a basis higher than fair market value for the gift tax. 
B) It removes property from the taxable estate. 
C) It receives a step-up in basis to fair market value. 
D) Appreciation escapes taxation when it is sold at a later date. 
A) It may receive a basis higher than fair market value for the gift tax. 
B) It removes property from the taxable estate. 
C) It receives a step-up in basis to fair market value. 
D) Appreciation escapes taxation when it is sold at a later date.

Question 19

Jessica is doing her year-end tax planning and is concerned about gift taxes.If she comes to you for advice, which of the following would you tell her is a taxable gift?

Accepted Answer

A) Payment to the doctor for her gardener's medical expenses 
B) Tuition paid to Norden University for her hairdresser's daughter, Trisha. 
C) A donation to her favorite political organization 
D) Buying a $20,000 car for Trisha when she goes away to Norden University 
A) Payment to the doctor for her gardener's medical expenses 
B) Tuition paid to Norden University for her hairdresser's daughter, Trisha. 
C) A donation to her favorite political organization 
D) Buying a $20,000 car for Trisha when she goes away to Norden University

Question 20

Which of the following is a taxable gift?

Accepted Answer

A) $25,000 given to the Democratic party. 
B) $24,000 paid to Stanford University by Joel for the tuition for his best friend's son. 
C) $100,000 given to the Red Cross. 
D) None are taxable gifts. 
A) $25,000 given to the Democratic party. 
B) $24,000 paid to Stanford University by Joel for the tuition for his best friend's son. 
C) $100,000 given to the Red Cross. 
D) None are taxable gifts.

The executor can elect the alternative valuation date only if both the value of the estate and the estate tax are reduced.

A fiduciary tax return is filed by

Carl gave his six children gifts of $16,000 each in the current year.

The kiddie tax applies to all unearned income of a child under 19.

Chloe gave $16,000 to her son, $21,000 to her daughter, and paid $18,000 to the University of Delaware for her niece's tuition.She gave $12,000 to the United Way campaign, and $18,000 to her church.What is the amount of Chloe's taxable gifts?

Which of the following statements does not apply to a revocable trust?

A trust that features a demand provision by a beneficiary equal to the annual exclusion is

The amount of the kiddie tax is the sum of

Distributable net income (DNI) is

Carey is trustee of the Floyd Family Trust.The trust distributes $20,000 income to George, $10,000 to Linda, and $5,000 to George and Linda's church.The Floyd Family trust is:

George made a gift of stock valued at $450,000 (basis = $300,000) to his daughter Sally and was required to pay a gift tax of $30,000 on this gift.Which of the following is true regarding this gift?

An income interest in a trust

Glenda, age 8, has $6,150 interest from a trust fund established by her grandfather several years ago.How much of Glenda's income is taxed at the trust and estate's tax rate?

If two properties are currently of equal value, giving away the property least likely to appreciate would reduce potential estate value.

Which of the following is a taxable gift (before applying the unified credit)?

The following gifts could be subject to the generation skipping transfer tax except:

Which of the following is an advantage to making a lifetime transfer of property to a donee?

Jessica is doing her year-end tax planning and is concerned about gift taxes.If she comes to you for advice, which of the following would you tell her is a taxable gift?

Which of the following is a taxable gift?

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

The executor can elect the alternative valuation date only if both the value of the estate and the estate tax are reduced.

A fiduciary tax return is filed by

Carl gave his six children gifts of $16,000 each in the current year.

The kiddie tax applies to all unearned income of a child under 19.

Chloe gave $16,000 to her son, $21,000 to her daughter, and paid $18,000 to the University of Delaware for her niece's tuition.She gave $12,000 to the United Way campaign, and $18,000 to her church.What is the amount of Chloe's taxable gifts?

Which of the following statements does not apply to a revocable trust?

A trust that features a demand provision by a beneficiary equal to the annual exclusion is

The amount of the kiddie tax is the sum of

Distributable net income (DNI) is

Carey is trustee of the Floyd Family Trust.The trust distributes $20,000 income to George, $10,000 to Linda, and $5,000 to George and Linda's church.The Floyd Family trust is:

George made a gift of stock valued at $450,000 (basis = $300,000) to his daughter Sally and was required to pay a gift tax of $30,000 on this gift.Which of the following is true regarding this gift?

An income interest in a trust

Glenda, age 8, has $6,150 interest from a trust fund established by her grandfather several years ago.How much of Glenda's income is taxed at the trust and estate's tax rate?

If two properties are currently of equal value, giving away the property least likely to appreciate would reduce potential estate value.

Which of the following is a taxable gift (before applying the unified credit)?

The following gifts could be subject to the generation skipping transfer tax except:

Which of the following is an advantage to making a lifetime transfer of property to a donee?

Jessica is doing her year-end tax planning and is concerned about gift taxes.If she comes to you for advice, which of the following would you tell her is a taxable gift?

Which of the following is a taxable gift?

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