Question 1

The gift tax is imposed on intervivos (lifetime) transfers.

Accepted Answer

A) True 
 B)False

Question 2

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

$101,000
Caleb will be entitled to an an

Question 3

Which of the following is a true statement?

Accepted Answer

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

Question 4

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 5

The testamentary transfer of property to a qualified charity is deductible in calculating the taxable estate without any ceiling limitation.

Accepted Answer

A) True 
 B)False

Question 6

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 7

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?

Accepted Answer

$500,000
Because Ashley owned

Question 8

The amount of the estate tax is directly related to the amount of taxable gifts.

Accepted Answer

A) True 
 B)False

Question 9

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

Question 10

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

Accepted Answer

A) True 
 B)False

Question 11

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

value of money, the total tax

Question 12

For 2017, the exemption equivalent for the estate tax is $5.49 million.

Accepted Answer

A) True 
 B)False

Question 13

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

Accepted Answer

A) True 
 B)False

Question 14

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 15

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

Accepted Answer

A) True 
 B)False

Question 16

When creating an estate tax planning strategy, the income tax benefit derived from astep-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 17

An exemption equivalent is the amount of annual gifts that is automatically exempt fromthe gift tax.

Accepted Answer

A) True 
 B)False

Question 18

A applicable credit is subtracted in calculating both the gift tax and the estate tax. Why doesn't this calculation have the effect of increasing the total applicable credit amount?

Accepted Answer

A)  The applicable credit varies in amount from year to year. 
B)  The applicable credit only offsets the exemption equivalent. 
C)  The applicable credit cannot be used to offset gift taxes on adjusted taxable gifts. 
D)  The tentative estate tax is reduced by only taxes payable on adjusted taxable gifts rather than gross gift taxes. 
E)  None of the choices are correct. 
A)  The applicable credit varies in amount from year to year. 
B)  The applicable credit only offsets the exemption equivalent. 
C)  The applicable credit cannot be used to offset gift taxes on adjusted taxable gifts. 
D)  The tentative estate tax is reduced by only taxes payable on adjusted taxable gifts rather than gross gift taxes. 
E)  None of the choices are correct.

Question 19

Ricardo transferred $1,000,000 of cash to State University for a new sports complex. Calculate the amount of the taxable gift.

Accepted Answer

Zero.
The gift qualifies for an annual e

Question 20

Which of the following transfers is a completed gift?

Accepted Answer

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

Exam 25: Transfer Taxes and Wealth Planning

The gift tax is imposed on intervivos (lifetime) transfers.

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?

Which of the following is a true statement?

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

The testamentary transfer of property to a qualified charity is deductible in calculating the taxable estate without any ceiling limitation.

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.

The amount of the estate tax is directly related to the amount of taxable gifts.

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

For 2017, the exemption equivalent for the estate tax is $5.49 million.

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

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

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

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

An exemption equivalent is the amount of annual gifts that is automatically exempt fromthe gift tax.

A applicable credit is subtracted in calculating both the gift tax and the estate tax. Why doesn't this calculation have the effect of increasing the total applicable credit amount?

Ricardo transferred $1,000,000 of cash to State University for a new sports complex. Calculate the amount of the taxable gift.

Which of the following transfers is a completed gift?

An Introduction to Tax

Tax Compliance, the Irs, and Tax Authorities

Tax Planning Strategies and Related Limitations

Individual Income Tax Overview, Exemptions, 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 US Taxation of Multinational Transactions

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