Question 1

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 2

Which of the following transfers is a complete gift?

Accepted Answer

A) Payment of child support by a former spouse. 
B) Transfer of property to a revocable trust. 
C) Transfer of cash to a bank account held in joint tenancy with the right of survivorship. 
D) Income paid to the beneficiary of a revocable trust. 
E) None of the choices is a complete gift. 
A) Payment of child support by a former spouse. 
B) Transfer of property to a revocable trust. 
C) Transfer of cash to a bank account held in joint tenancy with the right of survivorship. 
D) Income paid to the beneficiary of a revocable trust. 
E) None of the choices is a complete gift.

Question 3

Alexis transferred $400,000 to a trust with directions to pay income to her spouse,William,for his life.After William's death the corpus of the trust will pass to William's son.If the life estate is valued at $72,000,what is the total amount of the taxable gifts?

Accepted Answer

A) $385,000. 
B) $57,000. 
C) $375,000. 
D) $328,000. 
E) None of the choices are correct. 
A) $385,000. 
B) $57,000. 
C) $375,000. 
D) $328,000. 
E) None of the choices are correct.

Question 4

Chloe's gross estate consists of the following property valued at the date of death:   Chloe's real estate is encumbered by a mortgage of $450,000,and Chloe's executor paid her funeral costs of $6,000 and charged fees for $24,000.Which of the following is a true statement?

Accepted Answer

A) Chloe's adjusted gross estate is at least $12,020,000. 
B) Chloe's taxable estate is at least $12,020,000. 
C) Chloe's taxable estate is $12,050,000. 
D) Chloe's estate will calculate the tentative estate tax on $12.5 million. 
E) None of the choices are true. 
A) Chloe's adjusted gross estate is at least $12,020,000. 
B) Chloe's taxable estate is at least $12,020,000. 
C) Chloe's taxable estate is $12,050,000. 
D) Chloe's estate will calculate the tentative estate tax on $12.5 million. 
E) None of the choices are true.

Question 5

The gross estate includes the value of half of real property owned by a decedent and spouse in joint tenancy with the right of survivorship.

Accepted Answer

A) True 
 B)False

Question 6

The gift-splitting election only applies to gifts made by taxpayers who reside in community-property states.

Accepted Answer

A) True 
 B)False

Question 7

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

Accepted Answer

A) $85,000. 
B) $85,000 if Tyrone had an incident of ownership of the policy at the time of his death. 
C) zero if Tyrone did not transfer any ownership of the policy within three years of his date of death. 
D) zero-life insurance proceeds due to the death of the decedent are not included in the gross estate. 
E) zero if Tyrone's estate uses the insurance proceeds to pay Tyrone's estate tax. 
A) $85,000. 
B) $85,000 if Tyrone had an incident of ownership of the policy at the time of his death. 
C) zero if Tyrone did not transfer any ownership of the policy within three years of his date of death. 
D) zero-life insurance proceeds due to the death of the decedent are not included in the gross estate. 
E) zero if Tyrone's estate uses the insurance proceeds to pay Tyrone's estate tax.

Question 8

The gross estate always includes the value of half of any real property owned by a decedent and another person in joint tenancy with the right of survivorship.

Accepted Answer

A) True 
 B)False

Question 9

A trust is a legal entity whose purpose is to hold and administer property for the benefit of beneficiaries.

Accepted Answer

A) True 
 B)False

Question 10

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 11

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 12

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

Accepted Answer

A) True 
 B)False

Question 13

The probate estate will include the total value of all real property owned by the decedent at the time of death regardless of whether the decedent co-owned the property as a tenant in common or as a joint tenant with the right of survivorship.

Accepted Answer

A) True 
 B)False

Question 14

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 15

The exemption equivalent was repealed in 2010.

Accepted Answer

A) True 
 B)False

Question 16

Matthew and Addison are married and live in Michigan,a common-law state.For the holidays Addison gave cash gifts of $40,000 to each of her two sons,and Matthew gave $40,000 to his daughter.What is the amount of Addison's taxable gifts if Matthew and Addison opt to gift-split?

Accepted Answer

A) $45,000 
B) $18,000. 
C) $15,000. 
D) $10,000. 
E) None of the choices are correct. 
A) $45,000 
B) $18,000. 
C) $15,000. 
D) $10,000. 
E) None of the choices are correct.

Question 17

A couple who is married at the time of completing a gift can elect to file a joint gift tax return.

Accepted Answer

A) True 
 B)False

Question 18

At his death in 2019,Nathan owned the following property:
   The real estate is subject to a $1,700,000 mortgage and Nathan made taxable gifts in 2009 totaling $2 million,at which time he offset the gift tax with an applicable credit (exemption equivalent of $2 million).Nathan has never been married.What is the amount of his estate tax due? (Use Exhibit 25-1.)

Accepted Answer

$1.84 million.Nathan has a tax

Question 19

The federal transfer taxes are calculated using cumulative lifetime transfers.

Accepted Answer

A) True 
 B)False

Question 20

The tax on cumulative taxable gifts is reduced by the applicable credit regardless of whether any applicable credit was used in prior years.

Accepted Answer

A) True 
 B)False

Exam 25: Transfer Taxes and Wealth Planning

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

Which of the following transfers is a complete gift?

Alexis transferred $400,000 to a trust with directions to pay income to her spouse,William,for his life.After William's death the corpus of the trust will pass to William's son.If the life estate is valued at $72,000,what is the total amount of the taxable gifts?

Chloe's gross estate consists of the following property valued at the date of death: Chloe's real estate is encumbered by a mortgage of $450,000,and Chloe's executor paid her funeral costs of $6,000 and charged fees for $24,000.Which of the following is a true statement?

The gross estate includes the value of half of real property owned by a decedent and spouse in joint tenancy with the right of survivorship.

The gift-splitting election only applies to gifts made by taxpayers who reside in community-property states.

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

The gross estate always includes the value of half of any real property owned by a decedent and another person in joint tenancy with the right of survivorship.

A trust is a legal entity whose purpose is to hold and administer property for the benefit of beneficiaries.

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

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

The probate estate will include the total value of all real property owned by the decedent at the time of death regardless of whether the decedent co-owned the property as a tenant in common or as a joint tenant with the right of survivorship.

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

The exemption equivalent was repealed in 2010.

Matthew and Addison are married and live in Michigan,a common-law state.For the holidays Addison gave cash gifts of $40,000 to each of her two sons,and Matthew gave $40,000 to his daughter.What is the amount of Addison's taxable gifts if Matthew and Addison opt to gift-split?

A couple who is married at the time of completing a gift can elect to file a joint gift tax return.

The federal transfer taxes are calculated using cumulative lifetime transfers.

The tax on cumulative taxable gifts is reduced by the applicable credit regardless of whether any applicable credit was used in prior years.

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