Question 1

At his death Titus had a gross estate consisting of $6 million of property. Which of the following is a true statement about Titus' estate or estate tax?

Accepted Answer

A)  Titus must have a probate estate of at least $6 million. 
B)  Titus must have an adjusted gross estate of at least $6 million. 
C)  Titus must have cumulative taxable transfers of at least $6 million. 
D)  Titus must have a tentative transfer tax calculated on at least $2 million of transfers. 
E)  None of the choices are necessarily true. 
A)  Titus must have a probate estate of at least $6 million. 
B)  Titus must have an adjusted gross estate of at least $6 million. 
C)  Titus must have cumulative taxable transfers of at least $6 million. 
D)  Titus must have a tentative transfer tax calculated on at least $2 million of transfers. 
E)  None of the choices are necessarily true. E

Question 2

Which of the following is a true statement?

Accepted Answer

A)  A fiduciary entity is a legal entity that takes possession of property for the benefit of a person. 
B)  An estate is a fiduciary entity that comes into existence upon a person's death to transfer the decedent's real and personal property. 
C)  A trust is also a fiduciary entity whose purpose is to hold and administer the corpus for other persons (beneficiaries). 
D)  An estate exists only temporarily, but a trust may have a prolonged or even indefinite existence. 
E)  All of the choices are true. 
A)  A fiduciary entity is a legal entity that takes possession of property for the benefit of a person. 
B)  An estate is a fiduciary entity that comes into existence upon a person's death to transfer the decedent's real and personal property. 
C)  A trust is also a fiduciary entity whose purpose is to hold and administer the corpus for other persons (beneficiaries). 
D)  An estate exists only temporarily, but a trust may have a prolonged or even indefinite existence. 
E)  All of the choices are true. E

Question 3

Christian transferred $60,000 to an irrevocable trust for the benefit of his three daughters. The three daughters share income equally for five years and then the corpus of the trust is to be divided equally among them. What is the amount of the taxable gifts, if any, made by Christian?

Accepted Answer

A)  $60,000. 
B)  $46,000. 
C)  $34,000. 
D)  $18,000. 
E)  None of the choices are correct-the amount of the taxable gifts cannot be ascertained without valuing each income interest. 
A)  $60,000. 
B)  $46,000. 
C)  $34,000. 
D)  $18,000. 
E)  None of the choices are correct-the amount of the taxable gifts cannot be ascertained without valuing each income interest. E

Question 4

Harold and Mary are married and live in a community-property state. During the marriage Harold bought a parcel of real estate for $100,000 in community funds and titled the property in his name alone. Mary died on January 30th of this year and was survived by Harold, who did not remarry. The parcel of real property was worth $250,000 on January 30th of this year but was only worth $220,000 at year-end. What amount, if any, is included in Mary's gross estate?

Accepted Answer

A)  $250,000. 
B)  $220,000. 
C)  $125,000. 
D)  $110,000. 
E)  zero-Mary had no ownership interest in the property at her death. 
A)  $250,000. 
B)  $220,000. 
C)  $125,000. 
D)  $110,000. 
E)  zero-Mary had no ownership interest in the property at her death.

Question 5

At his death Jose owned real estate worth $22 million but subject to a mortgage of $7 million. Which of the following is a true statement?

Accepted Answer

A)  $22 million is included in Jose's gross estate. 
B)  $15 million is included in Jose's gross estate. 
C)  The $7 million mortgage must be paid by Jose's estate. 
D)  The $7 million mortgage is not deductible if Jose's will transfers the property to a charity. 
E)  All of the choices are correct. 
A)  $22 million is included in Jose's gross estate. 
B)  $15 million is included in Jose's gross estate. 
C)  The $7 million mortgage must be paid by Jose's estate. 
D)  The $7 million mortgage is not deductible if Jose's will transfers the property to a charity. 
E)  All of the choices are correct.

Question 6

Which of the following statements is (are) true for both gratuitous and testamentary transfers?

Accepted Answer

A)  An applicable credit of up to $15,000 per donee per year reduces the tax on any transfer. 
B)  An annual exclusion offsets any transfer up to $15,000. 
C)  An election can be made to split a transfer between spouses. 
D)  A charitable and a marital deduction are allowed in computing the taxable transfer. 
E)  All of the choices are true. 
A)  An applicable credit of up to $15,000 per donee per year reduces the tax on any transfer. 
B)  An annual exclusion offsets any transfer up to $15,000. 
C)  An election can be made to split a transfer between spouses. 
D)  A charitable and a marital deduction are allowed in computing the taxable transfer. 
E)  All of the choices are true.

Question 7

Property inherited from a decedent has an adjusted basis equal to the value of the property included in the decedent's estate.

Accepted Answer

A) True 
 B)False

Question 8

The generation-skipping tax is designed to accomplish which of the following?

Accepted Answer

A)  Generate additional revenues to supplement the estate tax. 
B)  Prevent the avoidance of transfer taxes (both estate and gift tax) through transfers that skip a generation of recipients. 
C)  Eliminate the possibility that the estate tax can be avoided by gifts in contemplation of death. 
D)  Replace the gift tax on distributions from trusts. 
E)  None of the choices are correct. 
A)  Generate additional revenues to supplement the estate tax. 
B)  Prevent the avoidance of transfer taxes (both estate and gift tax) through transfers that skip a generation of recipients. 
C)  Eliminate the possibility that the estate tax can be avoided by gifts in contemplation of death. 
D)  Replace the gift tax on distributions from trusts. 
E)  None of the choices are correct.

Question 9

At her death Siena owned real estate worth $200,000 that was titled with her sister in joint tenancy with the right of survivorship. Siena contributed $50,000 to the total cost of the property and her sister contributed the remaining $75,000. What amount, if any, is included in Siena's gross estate?

Accepted Answer

A)  $50,000. 
B)  $125,000. 
C)  $80,000. 
D)  $100,000. 
E)  None of the choices are correct. 
A)  $50,000. 
B)  $125,000. 
C)  $80,000. 
D)  $100,000. 
E)  None of the choices are correct.

Question 10

The estate and gift taxes share several common features. Which of the following characteristics is common to both the estate and gift taxes?

Accepted Answer

A)  An applicable credit and a marital deduction. 
B)  A charitable deduction and an annual exclusion. 
C)  A gift-splitting election and a deduction for income taxes paid by the fiduciary. 
D)  A charitable deduction and the unused spousal exemption equivalent. 
E)  All of these choices are characteristics common to both the gift and the estate tax. 
A)  An applicable credit and a marital deduction. 
B)  A charitable deduction and an annual exclusion. 
C)  A gift-splitting election and a deduction for income taxes paid by the fiduciary. 
D)  A charitable deduction and the unused spousal exemption equivalent. 
E)  All of these choices are characteristics common to both the gift and the estate tax.

Question 11

A gift tax return does not need to be filed unless the taxpayer has made current gifts in excess of the applicable credit.

Accepted Answer

A) True 
 B)False

Question 12

A withdrawal of money from a bank account held in joint tenancy with the right of survivorship may constitute a complete gift.

Accepted Answer

A) True 
 B)False

Question 13

Proceeds of life insurance paid due to the death of the decedent are included in the decedent's gross estate if the decedent had the right to designate the beneficiary of the policy.

Accepted Answer

A) True 
 B)False

Question 14

Life insurance is an asset that can be used to fund a trust to support a surviving spouse and yet may not be included in the decedent's gross estate.

Accepted Answer

A) True 
 B)False

Question 15

The applicable credit is designed to allow a minimum amount of lifetime transfers without triggering the imposition of a transfer tax.

Accepted Answer

A) True 
 B)False

Question 16

Which of the following is a true statement?

Accepted Answer

A)  Executor's fees paid by an estate are deductible in computing the gross estate. 
B)  Funeral expenses for the decedent paid by an estate are deductible in computing the adjusted gross estate. 
C)  An executor can choose to deduct the decedent's funeral expenses on either the estate tax return or the estate's income tax return. 
D)  An executor can only deduct the costs of administering the decedent's estate on the estate's income tax return. 
E)  None of the choices are true. 
A)  Executor's fees paid by an estate are deductible in computing the gross estate. 
B)  Funeral expenses for the decedent paid by an estate are deductible in computing the adjusted gross estate. 
C)  An executor can choose to deduct the decedent's funeral expenses on either the estate tax return or the estate's income tax return. 
D)  An executor can only deduct the costs of administering the decedent's estate on the estate's income tax return. 
E)  None of the choices are true.

Question 17

The calculation of the value of a life estate in a trust generally does not depend upon which of the following factors?

Accepted Answer

A)  the age of the life tenant. 
B)  the Section 7520 interest rate. 
C)  the value of the property at the time of the transfer. 
D)  the manner in which the trust corpus is invested. 
E)  All of these factors are utilized in the calculation of the value of a life estate in a trust. 
A)  the age of the life tenant. 
B)  the Section 7520 interest rate. 
C)  the value of the property at the time of the transfer. 
D)  the manner in which the trust corpus is invested. 
E)  All of these factors are utilized in the calculation of the value of a life estate in a trust.

Question 18

Eric has $5 million of property that he wants to leave to his four children. He is considering making a current gift of the property (rather than leaving the property to pass through his will). Eric has made many prior taxable gifts, and additional taxable transfers will be subject to the highest transfer tax rate. Determine how much estate tax Eric will save if he gifts the property now and survives at least three years, during which time the property appreciates to $5.5 million. Ignore the time value of money in your calculation. (Use Exhibit 25-1.)

Accepted Answer

$1,014,440.
The top transfer tax rate is

Question 19

The federal transfer taxes are calculated using cumulative lifetime transfers.

Accepted Answer

A) True 
 B)False

Question 20

A serial gift strategy uses multiple gifts to maximize the value of the annual exclusion.

Accepted Answer

A) True 
 B)False

At his death Titus had a gross estate consisting of $6 million of property. Which of the following is a true statement about Titus' estate or estate tax?

Which of the following is a true statement?

Christian transferred $60,000 to an irrevocable trust for the benefit of his three daughters. The three daughters share income equally for five years and then the corpus of the trust is to be divided equally among them. What is the amount of the taxable gifts, if any, made by Christian?

At his death Jose owned real estate worth $22 million but subject to a mortgage of $7 million. Which of the following is a true statement?

Which of the following statements is (are) true for both gratuitous and testamentary transfers?

Property inherited from a decedent has an adjusted basis equal to the value of the property included in the decedent's estate.

The generation-skipping tax is designed to accomplish which of the following?

At her death Siena owned real estate worth $200,000 that was titled with her sister in joint tenancy with the right of survivorship. Siena contributed $50,000 to the total cost of the property and her sister contributed the remaining $75,000. What amount, if any, is included in Siena's gross estate?

The estate and gift taxes share several common features. Which of the following characteristics is common to both the estate and gift taxes?

A gift tax return does not need to be filed unless the taxpayer has made current gifts in excess of the applicable credit.

A withdrawal of money from a bank account held in joint tenancy with the right of survivorship may constitute a complete gift.

Proceeds of life insurance paid due to the death of the decedent are included in the decedent's gross estate if the decedent had the right to designate the beneficiary of the policy.

Life insurance is an asset that can be used to fund a trust to support a surviving spouse and yet may not be included in the decedent's gross estate.

The applicable credit is designed to allow a minimum amount of lifetime transfers without triggering the imposition of a transfer tax.

Which of the following is a true statement?

The calculation of the value of a life estate in a trust generally does not depend upon which of the following factors?

The federal transfer taxes are calculated using cumulative lifetime transfers.

A serial gift strategy uses multiple gifts to maximize the value of the annual exclusion.

Business Income, Deductions, and Accounting Methods

Property Acquisition and Cost Recovery

Property Dispositions

Entities Overview

Corporate Operations

Accounting for Income Taxes

Corporate Taxation: Nonliquidating Distributions

Corporate Formation, Reorganization, and Liquidation

Forming and Operating Partnerships

Dispositions of Partnership Interests and Partnership Distributions

S Corporations

State and Local Taxes

The Us Taxation of Multinational Transactions

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Exam 14: Transfer Taxes and Wealth Planning

At his death Titus had a gross estate consisting of $6 million of property. Which of the following is a true statement about Titus' estate or estate tax?

Which of the following is a true statement?

Christian transferred $60,000 to an irrevocable trust for the benefit of his three daughters. The three daughters share income equally for five years and then the corpus of the trust is to be divided equally among them. What is the amount of the taxable gifts, if any, made by Christian?

At his death Jose owned real estate worth $22 million but subject to a mortgage of $7 million. Which of the following is a true statement?

Which of the following statements is (are) true for both gratuitous and testamentary transfers?

Property inherited from a decedent has an adjusted basis equal to the value of the property included in the decedent's estate.

The generation-skipping tax is designed to accomplish which of the following?

The estate and gift taxes share several common features. Which of the following characteristics is common to both the estate and gift taxes?

A gift tax return does not need to be filed unless the taxpayer has made current gifts in excess of the applicable credit.

A withdrawal of money from a bank account held in joint tenancy with the right of survivorship may constitute a complete gift.

Proceeds of life insurance paid due to the death of the decedent are included in the decedent's gross estate if the decedent had the right to designate the beneficiary of the policy.

Life insurance is an asset that can be used to fund a trust to support a surviving spouse and yet may not be included in the decedent's gross estate.

The applicable credit is designed to allow a minimum amount of lifetime transfers without triggering the imposition of a transfer tax.

Which of the following is a true statement?

The calculation of the value of a life estate in a trust generally does not depend upon which of the following factors?

The federal transfer taxes are calculated using cumulative lifetime transfers.

A serial gift strategy uses multiple gifts to maximize the value of the annual exclusion.

Business Income, Deductions, and Accounting Methods

Property Acquisition and Cost Recovery

Property Dispositions

Entities Overview

Corporate Operations

Accounting for Income Taxes

Corporate Taxation: Nonliquidating Distributions

Corporate Formation, Reorganization, and Liquidation

Forming and Operating Partnerships

Dispositions of Partnership Interests and Partnership Distributions

S Corporations

State and Local Taxes

The Us Taxation of Multinational Transactions

Filters