Exam 14: Transfer Taxes and Wealth Planning

This year Samantha gave each of her three nephews birthday gifts of $10,000 in cash. At Christmas, Samantha gave each of her three nephews Christmas gifts of an additional $6,000 in cash. What is the amount of the taxable gifts, if any, made by Samantha this year?

Adjusted taxable gifts are added to the taxable estate to accomplish which of the following objectives?

Only complete gifts are subject to the federal gift tax.

Ashley owns a whole-life insurance policy worth $25,000 that directs the insurance company to pay the beneficiary $500,000 on her death. Ashley pays the annual policy premiums and has the power to designate the beneficiary of the policy. What value of the policy, if any, would be included in Ashley's estate upon her death?

The tax rate schedule on taxable transfers has a maximum tax rate of 40 percent.

A trust is a legal entity that can only exist for a year.

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

The marital and charitable deductions are common to both the estate tax and the gift tax formulas.

At her death Tricia had an adjusted gross estate consisting of $8 million of property. Which of the following is a true statement about Tricia's estate or estate tax?

A transfer of a terminable interest will not generally qualify for a marital deduction.

Property is included in the gross estate at the value a willing buyer would pay a willing seller, neither being under any compulsion to buy or to sell, and both having reasonable knowledge of the relevant facts.

This year Nicholas earned $500,000 and used it to purchase land in joint tenancy with a right of survivorship with Nevaeh. Has Nicholas made a taxable gift to Nevaeh and, if so, in what amount?

James and Jasmine live in a community-property state. This year they transferred $800,000 of property to an irrevocable trust that provides their son, Aaron, a life estate and their daughter, Lauren, the remainder. At the time of the gift, the Table S value for Aaron was .18031. What is the amount, if any, of the taxable gifts?

Both spouses must consent to any gift-splitting election.

Which of the following is a true statement?

The gross estate may contain property transfers that are not included in the probate estate.

Last year Brandon opened a savings account with a deposit of $45,000. The account was in the name of Brandon and Melanie, who have joint tenancy with the right of survivorship. Melanie did not contribute to the account, but this year she withdrew $18,000. Has Brandon made a taxable gift to Melanie, and if so, in what amount?

At his death Tyrone's life insurance policy paid his estate $85,000. What amount, if any, is included in Tyrone's gross estate?

When creating an estate tax planning strategy, the income tax benefit derived from a step-up in tax basis on assets should be measured against the estate tax cost of including the assets in the decedent's gross estate.

Which of the following is a complete taxable gift?