Question 1

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 2

The executor of Isabella's estate incurred administration expenses of $32,000 and paid $5,000 in funeral expenses. The executor charged the estate for $24,000 in fees. What is the maximum amount Isabella's estate can deduct in computing the adjusted gross estate?

Accepted Answer

A)  $32,000. 
B)  $37,000. 
C)  $56,000. 
D)  $61,000. 
E)  None of the choices are correct. 
A)  $32,000. 
B)  $37,000. 
C)  $56,000. 
D)  $61,000. 
E)  None of the choices are correct.

Question 3

The exemption equivalent was repealed in 1976.

Accepted Answer

A) True 
 B)False

Question 4

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

Accepted Answer

A) True 
 B)False

Question 5

At her death Serena owned real estate worth $210,000 with her spouse in joint tenancy with the right of survivorship. Serena contributed $50,000 to the original cost of the property and her spouse contributed the remaining $100,000. What amount, if any, is included in Serena's gross estate?

Accepted Answer

A)  $50,000. 
B)  $105,000. 
C)  $80,000. 
D)  $0. This property qualifies for the marital deduction. 
E)  None of the choices are correct. 
A)  $50,000. 
B)  $105,000. 
C)  $80,000. 
D)  $0. This property qualifies for the marital deduction. 
E)  None of the choices are correct.

Question 6

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

Accepted Answer

A) True 
 B)False

Question 7

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

Accepted Answer

A)  A marital deduction and a deduction for casualty losses. 
B)  A marital deduction for transfers of all terminable interests. 
C)  The tax rate schedule for calculating gross transfer taxes. 
D)  A charitable deduction and an annual exclusion. 
E)  None of these choices list characteristics common to both the gift and the estate tax. 
A)  A marital deduction and a deduction for casualty losses. 
B)  A marital deduction for transfers of all terminable interests. 
C)  The tax rate schedule for calculating gross transfer taxes. 
D)  A charitable deduction and an annual exclusion. 
E)  None of these choices list characteristics common to both the gift and the estate tax.

Question 8

Which of the following statements is (are) True?

Accepted Answer

A)  The same transfer tax rate schedule is used to calculate both the estate tax and the gift tax. 
B)  The transfer tax rate schedule is regressive in nature. 
C)  The amount of the applicable credit varies according to whether the taxable transfer is intervivos or testamentary. 
D)  The exemption equivalent automatically offsets transfers in calculating cumulative taxable transfers. 
E)  All of the choices are True. 
A)  The same transfer tax rate schedule is used to calculate both the estate tax and the gift tax. 
B)  The transfer tax rate schedule is regressive in nature. 
C)  The amount of the applicable credit varies according to whether the taxable transfer is intervivos or testamentary. 
D)  The exemption equivalent automatically offsets transfers in calculating cumulative taxable transfers. 
E)  All of the choices are True.

Question 9

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 10

This year Evelyn created an irrevocable trust to provide for Ed, her 32-year-old nephew, and Ed's family. Evelyn transferred $150,000 to the trust and named a bank as the trustee. The trust was directed to pay income to Ed until he reaches age 35 (three years from now), and at that time the trust is to be terminated and the corpus is to be distributed to Ed's two children (or their estates). Determine the amount, if any, of the taxable gift. The relevant interest rate is 6 percent.

Accepted Answer

$135,000
The $150,000 transfer to the tr

Question 11

Both spouses must consent to any gift-splitting election.

Accepted Answer

A) True 
 B)False

Question 12

This year Alex's friend, Kimberly, was disabled. Alex paid $30,000 to Kimberly's doctor for medical expenses. In addition, Alex also paid $25,000 to Kimberly directly so that her son could afford tuition at State University this year. Has Alex made taxable gifts, and if so, in what amounts?

Accepted Answer

The payment to Kimberly was a taxable gi

Question 13

At his death Trevor had a probate estate consisting of $4 million of property. Which of the following is a True statement about Trevor's estate or estate tax?

Accepted Answer

A)  Trevor must have a taxable estate of at least $4 million. 
B)  Trevor must have an adjusted gross estate of at least $4 million. 
C)  Trevor must have an estate tax base (cumulative taxable transfers) of at least $4 million. 
D)  Trevor must have a gross estate of at least $4 million. 
E)  None of the choices are necessarily True. 
A)  Trevor must have a taxable estate of at least $4 million. 
B)  Trevor must have an adjusted gross estate of at least $4 million. 
C)  Trevor must have an estate tax base (cumulative taxable transfers) of at least $4 million. 
D)  Trevor must have a gross estate of at least $4 million. 
E)  None of the choices are necessarily True.

Question 14

Christopher's residence was damaged by a storm during the administration of his estate. Christopher's executor paid $120,000 to repair the residence after the storm. Which of the following is a True statement?

Accepted Answer

A)  A casualty loss of $120,000 can be deducted on Christopher's final individual income tax return. 
B)  The casualty loss deduction is limited to the loss in excess of 10 percent of Christopher's AGI. 
C)  Christopher's executor can deduct a loss of $120,000 on the estate tax return. 
D)  No casualty loss deduction is available for calculating the estate tax. 
E)  None of the choices are True. 
A)  A casualty loss of $120,000 can be deducted on Christopher's final individual income tax return. 
B)  The casualty loss deduction is limited to the loss in excess of 10 percent of Christopher's AGI. 
C)  Christopher's executor can deduct a loss of $120,000 on the estate tax return. 
D)  No casualty loss deduction is available for calculating the estate tax. 
E)  None of the choices are True.

Question 15

Jonathan transferred $90,000 of cash to a trust this year for the benefit of Hannah, age 10. The trustee has the discretion to distribute income or corpus (principal) for Hannah's benefit and is required to distribute all assets to Hannah (or her estate) not later than Hannah's 21ˢᵗ birthday. What is the amount of the taxable gift?

Accepted Answer

A)  $90,000. 
B)  $75,000. 
C)  $64,000. 
D)  zero - there is no completed gift until the trustee makes a distribution from the trust. 
E)  None of the choices are correct. 
A)  $90,000. 
B)  $75,000. 
C)  $64,000. 
D)  zero - there is no completed gift until the trustee makes a distribution from the trust. 
E)  None of the choices are correct.

Question 16

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

Accepted Answer

A) True 
 B)False

Question 17

Angel and Abigail are married and live in a common law state. Angel and Abigail own a parcel of realty as joint tenants with the right of survivorship. In addition, Abigail owns another parcel of realty in her name alone. If Abigail should die when the jointly-owned realty is worth $1 million and her own parcel of realty is worth $1.5 million, what is the total value of realty that would be included in Abigail's gross estate?

Accepted Answer

$2 million
Abigail's gross estate would

Question 18

A gratuitous transfer of property made during the lifetime of the donor is called:

Accepted Answer

A)  an incomplete gift. 
B)  a testamentary transfer. 
C)  a taxable gift. 
D)  an intervivos transfer. 
E)  All of the choices are correct. 
A)  an incomplete gift. 
B)  a testamentary transfer. 
C)  a taxable gift. 
D)  an intervivos transfer. 
E)  All of the choices are correct.

Question 19

Sophia is single and owns the following property:
   
Sophia owns the real property in joint tenancy with Daniel. They purchased the property several years ago for $1 million. Sophia was only able to provide $200,000 of the purchase price. If Sophia dies, what is the amount of her gross estate?

Accepted Answer

$4 million
Sophia's estate includes the

Question 20

A bypass provision in a will requires a decedent to have a taxable estate in order to use an applicable credit to reduce total estate taxes on a married couple.

Accepted Answer

A) True 
 B)False

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

The executor of Isabella's estate incurred administration expenses of $32,000 and paid $5,000 in funeral expenses. The executor charged the estate for $24,000 in fees. What is the maximum amount Isabella's estate can deduct in computing the adjusted gross estate?

The exemption equivalent was repealed in 1976.

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

At her death Serena owned real estate worth $210,000 with her spouse in joint tenancy with the right of survivorship. Serena contributed $50,000 to the original cost of the property and her spouse contributed the remaining $100,000. What amount, if any, is included in Serena's gross estate?

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

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

Which of the following statements is (are) True?

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?

Both spouses must consent to any gift-splitting election.

This year Alex's friend, Kimberly, was disabled. Alex paid $30,000 to Kimberly's doctor for medical expenses. In addition, Alex also paid $25,000 to Kimberly directly so that her son could afford tuition at State University this year. Has Alex made taxable gifts, and if so, in what amounts?

At his death Trevor had a probate estate consisting of $4 million of property. Which of the following is a True statement about Trevor's estate or estate tax?

Christopher's residence was damaged by a storm during the administration of his estate. Christopher's executor paid $120,000 to repair the residence after the storm. Which of the following is a True statement?

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

A gratuitous transfer of property made during the lifetime of the donor is called:

Sophia is single and owns the following property: Sophia owns the real property in joint tenancy with Daniel. They purchased the property several years ago for $1 million. Sophia was only able to provide $200,000 of the purchase price. If Sophia dies, what is the amount of her gross estate?

A bypass provision in a will requires a decedent to have a taxable estate in order to use an applicable credit to reduce total estate taxes on a married couple.

Business Income, Deductions, and Accounting Methods

Property Acquisition and Cost Recovery

Property Dispositions

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 U.S. Taxation of Multinational Transactions

Filters

Exam 14: Transfer Taxes and Wealth Planning

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

The executor of Isabella's estate incurred administration expenses of $32,000 and paid $5,000 in funeral expenses. The executor charged the estate for $24,000 in fees. What is the maximum amount Isabella's estate can deduct in computing the adjusted gross estate?

The exemption equivalent was repealed in 1976.

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

At her death Serena owned real estate worth $210,000 with her spouse in joint tenancy with the right of survivorship. Serena contributed $50,000 to the original cost of the property and her spouse contributed the remaining $100,000. What amount, if any, is included in Serena's gross estate?

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

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

Which of the following statements is (are) True?

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?

Both spouses must consent to any gift-splitting election.

This year Alex's friend, Kimberly, was disabled. Alex paid $30,000 to Kimberly's doctor for medical expenses. In addition, Alex also paid $25,000 to Kimberly directly so that her son could afford tuition at State University this year. Has Alex made taxable gifts, and if so, in what amounts?

At his death Trevor had a probate estate consisting of $4 million of property. Which of the following is a True statement about Trevor's estate or estate tax?

Christopher's residence was damaged by a storm during the administration of his estate. Christopher's executor paid $120,000 to repair the residence after the storm. Which of the following is a True statement?

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

A gratuitous transfer of property made during the lifetime of the donor is called:

Sophia is single and owns the following property: Sophia owns the real property in joint tenancy with Daniel. They purchased the property several years ago for $1 million. Sophia was only able to provide $200,000 of the purchase price. If Sophia dies, what is the amount of her gross estate?

A bypass provision in a will requires a decedent to have a taxable estate in order to use an applicable credit to reduce total estate taxes on a married couple.

Business Income, Deductions, and Accounting Methods

Property Acquisition and Cost Recovery

Property Dispositions

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 U.S. Taxation of Multinational Transactions

Filters