Question 1

The annual exclusion eliminates relatively small transfers of present interests in property.

Accepted Answer

A) True 
 B)False

Question 2

Which of the following is a true statement?

Accepted Answer

A) A remainder interest held by the decedent at the time of death is not included in the decedent's gross estate. 
B) The value of a remainder interest depends in part on the Section 7520 interest rate at the time of death. 
C) The value of a remainder interest in a life estate is independent of the age of the life tenant. 
D) The value of a life estate does not depend upon the age of the life tenant. 
E) None of the choices are true. 
A) A remainder interest held by the decedent at the time of death is not included in the decedent's gross estate. 
B) The value of a remainder interest depends in part on the Section 7520 interest rate at the time of death. 
C) The value of a remainder interest in a life estate is independent of the age of the life tenant. 
D) The value of a life estate does not depend upon the age of the life tenant. 
E) None of the choices are true.

Question 3

A future interest is a right to receive income or property in the future.

Accepted Answer

A) True 
 B)False

Question 4

Caleb transferred $115,000 to an irrevocable trust for Avery.The trustee has the discretion to distribute income or corpus for Avery's benefit but is required to distribute all assets to Avery (or his estate)not later than Avery's 21st birthday.What is the amount,if any,of the taxable gift?

Accepted Answer

$100,000.Caleb will be entitled to an an

Question 5

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 6

This year Maria transferred $600,000 to an irrevocable trust that pays equal shares of income annually to four cousins (or their estates)for the next eight years.At that time,the trust is terminated and the corpus of the trust reverts to Maria.Determine the amount,if any,of the current gifts and the taxable gifts if the relevant interest rate is 6 percent and Maria is married and elects to gift-split with her spouse?

Accepted Answer

$51,771 for Maria and $51,771 for Maria'

Question 7

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?

Accepted Answer

A) $3,000. 
B) $33,000. 
C) $48,000. 
D) zero-none of the gifts exceed the annual exclusion. 
E) None of the choices are correct. 
A) $3,000. 
B) $33,000. 
C) $48,000. 
D) zero-none of the gifts exceed the annual exclusion. 
E) None of the choices are correct.

Question 8

This year Nathan transferred $7 million to an irrevocable trust established for the benefit of his nephew.The trustee is directed to accumulate income for the next five years before distributing the trust corpus to Nathan's nephew.In past years Nathan has made taxable gifts of $6 million and used an applicable credit on an exemption equivalent of $5 million.What amount of gift tax,if any,must Nathan remit?

Accepted Answer

A) $240,000. 
B) $400,000. 
C) $345,800. 
D) zero-there is a $11.4 million exemption equivalent. 
E) None of the choices are correct.The amount of tax cannot be estimated without the use of a tax rate schedule. 
A) $240,000. 
B) $400,000. 
C) $345,800. 
D) zero-there is a $11.4 million exemption equivalent. 
E) None of the choices are correct.The amount of tax cannot be estimated without the use of a tax rate schedule.

Question 9

In order for a transfer to be treated as a complete gift,the transfer must be irrevocably relinquished by the donor.

Accepted Answer

A) True 
 B)False

Question 10

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 11

The debts of the decedent at the time of death are deducted in calculating the taxable estate.

Accepted Answer

A) True 
 B)False

Question 12

Ava transferred $1.5 million of real estate into an irrevocable trust for her son,Luis.The trustee was directed to retain income until Luis' 21st birthday and then pay him the corpus of the trust.Ava retained the power to require the trustee to pay income to Luis at any time,and retained the right to the assets if Luis predeceased her.What amount of the trust,if any,will be included in Ava's estate if she died shortly after making the transfer?

Accepted Answer

$1.5 million.The value of the trust asse

Question 13

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?

Accepted Answer

James and Jasmine each made taxable gift

Question 14

A serial gift strategy consists of arranging a trust to maximize the value of the applicable credit.

Accepted Answer

A) True 
 B)False

Question 15

Madison was married at the time of her death and her gross estate consisted of $22 million in stock and bonds.Madison left all of her property to her spouse.What is the result?

Accepted Answer

A) Madison's taxable estate will be zero. 
B) Madison's surviving spouse will have an income tax basis in the inherited property of zero. 
C) Madison's adjusted gross estate will be zero. 
D) Madison's estate will have a tentative estate tax of zero. 
E) None of the choices are correct. 
A) Madison's taxable estate will be zero. 
B) Madison's surviving spouse will have an income tax basis in the inherited property of zero. 
C) Madison's adjusted gross estate will be zero. 
D) Madison's estate will have a tentative estate tax of zero. 
E) None of the choices are correct.

Question 16

The gift tax is imposed on inter vivos (lifetime)transfers.

Accepted Answer

A) True 
 B)False

Question 17

Adrian owns two parcels of real estate.Parcel #1 is worth $400,000 and Parcel #2 is worth $660,000.Adrian plans to bequeath Parcel #1 directly to his spouse,Sofia,and leave her a life estate in Parcel #2.What amounts will be included in Adrian's taxable estate for these two parcels?

Accepted Answer

$660,000.Both parcels will be included i

Question 18

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.

Accepted Answer

A) True 
 B)False

Question 19

The estate tax is imposed on testamentary transfers.

Accepted Answer

A) True 
 B)False

Question 20

At his death Stanley owned real estate worth $345,000 with two other individuals as equal tenants in common.Stanley contributed $50,000 to the $100,000 total cost of the property.What amount,if any,is included in Stanley's gross estate?

Accepted Answer

A) $50,000. 
B) $172,500. 
C) $345,000. 
D) $115,000. 
E) None of the choices are correct. 
A) $50,000. 
B) $172,500. 
C) $345,000. 
D) $115,000. 
E) None of the choices are correct.

The annual exclusion eliminates relatively small transfers of present interests in property.

Which of the following is a true statement?

A future interest is a right to receive income or property in the future.

Caleb transferred $115,000 to an irrevocable trust for Avery.The trustee has the discretion to distribute income or corpus for Avery's benefit but is required to distribute all assets to Avery (or his estate)not later than Avery's 21^st birthday.What is the amount,if any,of the taxable gift?

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?

In order for a transfer to be treated as a complete gift,the transfer must be irrevocably relinquished by the donor.

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

The debts of the decedent at the time of death are deducted in calculating the taxable estate.

A serial gift strategy consists of arranging a trust to maximize the value of the applicable credit.

Madison was married at the time of her death and her gross estate consisted of $22 million in stock and bonds.Madison left all of her property to her spouse.What is the result?

The gift tax is imposed on inter vivos (lifetime)transfers.

Adrian owns two parcels of real estate.Parcel #1 is worth $400,000 and Parcel #2 is worth $660,000.Adrian plans to bequeath Parcel #1 directly to his spouse,Sofia,and leave her a life estate in Parcel #2.What amounts will be included in Adrian's taxable estate for these two parcels?

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.

The estate tax is imposed on testamentary transfers.

At his death Stanley owned real estate worth $345,000 with two other individuals as equal tenants in common.Stanley contributed $50,000 to the $100,000 total cost of the property.What amount,if any,is included in Stanley's gross estate?

An Introduction to Tax

Tax Compliance,the Irs,and Tax Authorities

Tax Planning Strategies and Related Limitations

Individual Income Tax Overview,dependents,and Filing Status

Gross Income and Exclusions

Individual Deductions

Investments

Individual Income Tax Computation and Tax Credits

Business Income,deductions,and Accounting Methods

Property Acquisition and Cost Recovery

Property Dispositions

Compensation

Retirement Savings and Deferred Compensation

Tax Consequences of Home Ownership

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 Ustaxation of Multinational Transactions

Filters

Exam 25: Transfer Taxes and Wealth Planning

The annual exclusion eliminates relatively small transfers of present interests in property.

Which of the following is a true statement?

A future interest is a right to receive income or property in the future.

Caleb transferred $115,000 to an irrevocable trust for Avery.The trustee has the discretion to distribute income or corpus for Avery's benefit but is required to distribute all assets to Avery (or his estate)not later than Avery's 21st birthday.What is the amount,if any,of the taxable gift?

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?

In order for a transfer to be treated as a complete gift,the transfer must be irrevocably relinquished by the donor.

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

The debts of the decedent at the time of death are deducted in calculating the taxable estate.

A serial gift strategy consists of arranging a trust to maximize the value of the applicable credit.

Madison was married at the time of her death and her gross estate consisted of $22 million in stock and bonds.Madison left all of her property to her spouse.What is the result?

The gift tax is imposed on inter vivos (lifetime)transfers.

Adrian owns two parcels of real estate.Parcel #1 is worth $400,000 and Parcel #2 is worth $660,000.Adrian plans to bequeath Parcel #1 directly to his spouse,Sofia,and leave her a life estate in Parcel #2.What amounts will be included in Adrian's taxable estate for these two parcels?

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.

The estate tax is imposed on testamentary transfers.

At his death Stanley owned real estate worth $345,000 with two other individuals as equal tenants in common.Stanley contributed $50,000 to the $100,000 total cost of the property.What amount,if any,is included in Stanley's gross estate?

An Introduction to Tax

Tax Compliance,the Irs,and Tax Authorities

Tax Planning Strategies and Related Limitations

Individual Income Tax Overview,dependents,and Filing Status

Gross Income and Exclusions

Individual Deductions

Investments

Individual Income Tax Computation and Tax Credits

Business Income,deductions,and Accounting Methods

Property Acquisition and Cost Recovery

Property Dispositions

Compensation

Retirement Savings and Deferred Compensation

Tax Consequences of Home Ownership

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 Ustaxation of Multinational Transactions

Filters

Caleb transferred $115,000 to an irrevocable trust for Avery.The trustee has the discretion to distribute income or corpus for Avery's benefit but is required to distribute all assets to Avery (or his estate)not later than Avery's 21^st birthday.What is the amount,if any,of the taxable gift?