Question 1

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 2

Joshua and David purchased real property for $500,000 as equal tenants in common. Although they are listed as equal co-owners, Joshua was only able to provide $200,000 of the purchase price. David treated the additional $100,000 of his contribution to the purchase price as a gift to Joshua. If the property is worth $2.5 million at Joshua's death, what amount would be included in Joshua's estate?

Accepted Answer

$1.25 million
If the title to

Question 3

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 4

At her death Tricia owned a life insurance policy on her life that paid her daughter $500,000 upon her death. The policy was only valued at $25,000 prior to Tricia's death. What amount, if any, is included in Tricia's gross estate?

Accepted Answer

A)  $500,000. 
B)  $25,000. 
C)  $25,000 if Tricia transferred ownership of the policy within three years of her date of death. 
D)  zero - life insurance proceeds due to the death of the decedent are not included in the decedent's gross estate. 
E)  zero if Tricia's daughter refused to accept the proceeds. 
A)  $500,000. 
B)  $25,000. 
C)  $25,000 if Tricia transferred ownership of the policy within three years of her date of death. 
D)  zero - life insurance proceeds due to the death of the decedent are not included in the decedent's gross estate. 
E)  zero if Tricia's daughter refused to accept the proceeds.

Question 5

Which of the following transactions would not utilize the "Section 7520 rate" to calculate the value of the transfer?

Accepted Answer

A)  A transfer of property with a retained life estate. 
B)  A transfer of property to a spouse. 
C)  A transfer of a remainder interest in real property. 
D)  A transfer of a 10-year term certain in real property. 
E)  None of these choices utilizes the "Section 7520 rate" in the calculation of the value of the property. 
A)  A transfer of property with a retained life estate. 
B)  A transfer of property to a spouse. 
C)  A transfer of a remainder interest in real property. 
D)  A transfer of a 10-year term certain in real property. 
E)  None of these choices utilizes the "Section 7520 rate" in the calculation of the value of the property.

Question 6

Tracey is unmarried and owns $17 million in stock and bonds. What is the result if Tracey dies this year and leaves all of her property to a qualified charity?

Accepted Answer

A)  Tracey's gross estate will be zero. 
B)  Tracey's estate tax basis will be zero. 
C)  Tracey's taxable estate will be zero. 
D)  Tracey's estate will have a tentative estate tax of zero. 
E)  None of the choices are correct. 
A)  Tracey's gross estate will be zero. 
B)  Tracey's estate tax basis will be zero. 
C)  Tracey's taxable estate will be zero. 
D)  Tracey's estate will have a tentative estate tax of zero. 
E)  None of the choices are correct.

Question 7

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

Accepted Answer

A) True 
 B)False

Question 8

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

Accepted Answer

A)  An applicable credit and a marital deduction. 
B)  A charitable deduction and an annual exclusion. 
C)  A gift-splitting election and a deduction for income taxes paid by the fiduciary. 
D)  A charitable deduction and the unused spousal exemption equivalent. 
E)  All of these choices are characteristics common to both the gift and the estate tax. 
A)  An applicable credit and a marital deduction. 
B)  A charitable deduction and an annual exclusion. 
C)  A gift-splitting election and a deduction for income taxes paid by the fiduciary. 
D)  A charitable deduction and the unused spousal exemption equivalent. 
E)  All of these choices are characteristics common to both the gift and the estate tax.

Question 9

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 10

For 2018, the exemption equivalent for the estate tax is $11.18 million.

Accepted Answer

A) True 
 B)False

Question 11

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

Accepted Answer

A) True 
 B)False

Question 12

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 13

The estate tax is imposed on testamentary transfers.

Accepted Answer

A) True 
 B)False

Question 14

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 15

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

Accepted Answer

A) True 
 B)False

Question 16

At his death in 2018, 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

$1.92 million
Nathan has a tax

Question 17

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

Accepted Answer

A) True 
 B)False

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

Which of the following is a True statement?

Accepted Answer

A)  Leaving all property to the surviving spouse maximizes the marital deduction and therefore minimizes total transfer taxes on the estates of both spouses. 
B)  A bypass provision in the will of the deceased spouse is designed to use the applicable credit of the deceased spouse by transferring property to beneficiaries other than the surviving spouse. 
C)  Serial gifts are limited in scope because only $10,000 can be transferred each year tax-free to any specific donee. 
D)  Serial gifts can move significant amounts of wealth only if employed by multiple donors. 
E)  None of the choices are True. 
A)  Leaving all property to the surviving spouse maximizes the marital deduction and therefore minimizes total transfer taxes on the estates of both spouses. 
B)  A bypass provision in the will of the deceased spouse is designed to use the applicable credit of the deceased spouse by transferring property to beneficiaries other than the surviving spouse. 
C)  Serial gifts are limited in scope because only $10,000 can be transferred each year tax-free to any specific donee. 
D)  Serial gifts can move significant amounts of wealth only if employed by multiple donors. 
E)  None of the choices are True.

Question 20

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

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

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

At her death Tricia owned a life insurance policy on her life that paid her daughter $500,000 upon her death. The policy was only valued at $25,000 prior to Tricia's death. What amount, if any, is included in Tricia's gross estate?

Which of the following transactions would not utilize the "Section 7520 rate" to calculate the value of the transfer?

Tracey is unmarried and owns $17 million in stock and bonds. What is the result if Tracey dies this year and leaves all of her property to a qualified charity?

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

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

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?

For 2018, the exemption equivalent for the estate tax is $11.18 million.

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

The estate tax is imposed on testamentary transfers.

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

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

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

Which of the following is a True statement?

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

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

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

At her death Tricia owned a life insurance policy on her life that paid her daughter $500,000 upon her death. The policy was only valued at $25,000 prior to Tricia's death. What amount, if any, is included in Tricia's gross estate?

Which of the following transactions would not utilize the "Section 7520 rate" to calculate the value of the transfer?

Tracey is unmarried and owns $17 million in stock and bonds. What is the result if Tracey dies this year and leaves all of her property to a qualified charity?

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

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

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?

For 2018, the exemption equivalent for the estate tax is $11.18 million.

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

The estate tax is imposed on testamentary transfers.

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

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

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

Which of the following is a True statement?

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