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.

Question 2

For the holidays, Samuel gave a necklace worth $35,000 to Jennifer and jewelry worth $44,000 to Savannah. Samuel is married to Wendy and they live in a community-property state. Has Samuel made any taxable gifts and, if so, in what amounts?

Accepted Answer

$2,500 and $7,000.
Since the gifts are f

Question 3

Aiden transferred $2 million to an irrevocable trust with income to Valeria for her life and the remainder to Jocelyn (or her estate). Calculate the value of the remainder and the life estate if Valeria's age and the prevailing interest rate result in a Table S discount factor for the remainder of 0.47.

Accepted Answer

The remainder value is $940,000 and the

Question 4

Alexis transferred $456,000 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 $76,000, what is the total amount of the taxable gifts?

Accepted Answer

A) $441,000. 
B) $61,000. 
C) $431,000. 
D) $380,000. 
E) None of the choices are correct. 
A) $441,000. 
B) $61,000. 
C) $431,000. 
D) $380,000. 
E) None of the choices are correct.

Question 5

Which of the following is a true statement?

Accepted Answer

A) A serial gift strategy utilizes inter vivos gifts to multiple donees over multiple years to maximize the annual exclusion. 
B) A serial gift strategy works well even if the gifts don't qualify as present interests. 
C) A bypass trust avoids all estate taxes on the estate of the first spouse to die. 
D) The income tax savings from holding appreciated property until death are always outweighed by the additional estate tax imposed on the property. 
E) None of the choices are true. 
A) A serial gift strategy utilizes inter vivos gifts to multiple donees over multiple years to maximize the annual exclusion. 
B) A serial gift strategy works well even if the gifts don't qualify as present interests. 
C) A bypass trust avoids all estate taxes on the estate of the first spouse to die. 
D) The income tax savings from holding appreciated property until death are always outweighed by the additional estate tax imposed on the property. 
E) None of the choices are true.

Question 6

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 7

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

Accepted Answer

A) True 
 B)False

Question 8

An 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 tentative estate tax is reduced by only taxes payable on adjusted taxable gifts rather than gross gift taxes. 
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 applicable credit varies in amount from year to year. 
E) None of the choices are correct. 
A) The tentative estate tax is reduced by only taxes payable on adjusted taxable gifts rather than gross gift taxes. 
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 applicable credit varies in amount from year to year. 
E) None of the choices are correct.

Question 9

Ethan owned a vacation home at the time of his death. Which of the following is a true statement if Ethan was married to Emma and resided in a common-law state at the time of his death?

Accepted Answer

A) Ethan can claim a marital deduction for the vacation home if he bequeaths it to Emma. 
B) Ethan cannot claim a marital deduction if he bequeaths a life estate in the vacation home to Emma. 
C) Ethan can claim a marital deduction for half the value of the vacation home if it was owned with Emma in joint tenancy with the right of survivorship. 
D) Ethan can claim a charitable deduction if he bequeaths it to a qualified charity. 
E) All of the choices are true. 
A) Ethan can claim a marital deduction for the vacation home if he bequeaths it to Emma. 
B) Ethan cannot claim a marital deduction if he bequeaths a life estate in the vacation home to Emma. 
C) Ethan can claim a marital deduction for half the value of the vacation home if it was owned with Emma in joint tenancy with the right of survivorship. 
D) Ethan can claim a charitable deduction if he bequeaths it to a qualified charity. 
E) All of the choices are true.

Question 10

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 11

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?

Accepted Answer

A) Tricia must have a taxable estate over $8 million. 
B) Tricia's taxable estate will not exceed $8 million. 
C) Tricia must have a probate estate tax of zero. 
D) Tricia must have a gross estate tax of zero. 
E) None of the choices are necessarily true. 
A) Tricia must have a taxable estate over $8 million. 
B) Tricia's taxable estate will not exceed $8 million. 
C) Tricia must have a probate estate tax of zero. 
D) Tricia must have a gross estate tax of zero. 
E) None of the choices are necessarily true.

Question 12

Ava transferred $2.05 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

${{[a(2)]:#.00}} million.
The value of t

Question 13

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 14

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 15

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

Accepted Answer

A) True 
 B)False

Question 16

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 17

Andrea transferred $655,000 of stock to a trust, with income to be paid to her niece for 20 years (value $192,000)and the remainder to be paid to her nephew (value $463,000). Andrea named a bank as independent trustee but retained the power to determine how much income, if any, will be paid in any particular year. What is the amount of the taxable gift, if any? Explain your answer.

Accepted Answer

The taxable gift is ${{[a(4)]:#,###}}.
A

Question 18

This year Don and his son purchased real estate for an investment. The price of the property was $500,000, and the title named Don and his son as joint tenants with the right of survivorship. Don provided $320,000 of the purchase price and his son provided the remaining $180,000. Has Don made a taxable gift and, if so, in what amount?

Accepted Answer

A) Don has made a taxable gift of $205,000. 
B) Don has made a taxable gift of $70,000. 
C) Don has made a taxable gift of $22,000. 
D) Don has made a taxable gift of $55,000. 
E) None of the choices are correct-Don did not make a taxable gift. 
A) Don has made a taxable gift of $205,000. 
B) Don has made a taxable gift of $70,000. 
C) Don has made a taxable gift of $22,000. 
D) Don has made a taxable gift of $55,000. 
E) None of the choices are correct-Don did not make a taxable gift.

Question 19

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?

Accepted Answer

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

Question 20

When a gift-splitting election is made, gifts made by either spouse during the year will be treated as if each spouse made one-half of the transfer.

Accepted Answer

A) True 
 B)False

Exam 25: 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?

For the holidays, Samuel gave a necklace worth $35,000 to Jennifer and jewelry worth $44,000 to Savannah. Samuel is married to Wendy and they live in a community-property state. Has Samuel made any taxable gifts and, if so, in what amounts?

Alexis transferred $456,000 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 $76,000, what is the total amount of the taxable gifts?

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.

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

An 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?

Ethan owned a vacation home at the time of his death. Which of the following is a true statement if Ethan was married to Emma and resided in a common-law state at the time of his death?

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

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?

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

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

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

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

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?

When a gift-splitting election is made, gifts made by either spouse during the year will be treated as if each spouse made one-half of the transfer.

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 Us Taxation 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?