Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

This year, Brent by himself purchased season baseball tickets in the exclusive sky club. The price of the tickets was $60,000, and Brent divided the tickets equally with his two brothers (Brent gave one-third of the tickets to each brother). Has Brent made a taxable gift and, if so, in what amount?

Accepted Answer

A)  Brent made a taxable gift of $45,000. 
B)  Brent made two taxable gifts of $17,000 each. 
C)  Brent transferred the tickets for love and affection so no gift tax is imposed. 
D)  Brent made two taxable gifts of $5,000. 
E)  None of the choices are correct. 
A)  Brent made a taxable gift of $45,000. 
B)  Brent made two taxable gifts of $17,000 each. 
C)  Brent transferred the tickets for love and affection so no gift tax is imposed. 
D)  Brent made two taxable gifts of $5,000. 
E)  None of the choices are correct.

Question 3

Life insurance is an asset that can be used to fund a trust to support a surviving spouse and, yet, may not be included in the decedent's gross estate.

Accepted Answer

A) True 
 B)False

Question 4

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

$100,000
Caleb will be entitled to an an

Question 5

A future interest is a right to receive income or property in the future.

Accepted Answer

A) True 
 B)False

Question 6

The gross estate may contain property transfers that are not included in the probate estate.

Accepted Answer

A) True 
 B)False

Question 7

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 tenants in common or as joint tenants with the right of survivorship.

Accepted Answer

A) True 
 B)False

Question 8

This year Nathan transferred $7 million to an irrevocable trust established for the benefit of his nephew. The trustee is directed to accumulate income for the next 5 years before distributing the trust corpus to Nathan's nephew. In past years Nathan has made taxable gifts of $6 million and used an applicable credit on an exemption equivalent of $5 million. What amount of gift tax, if any, must Nathan remit?

Accepted Answer

A)  $320,000. 
B)  $800,000. 
C)  $345,450. 
D)  zero - there is a $11.18 million exemption equivalent. 
E)  None of the choices are correct. The amount of tax cannot be estimated without the use of a tax rate schedule. 
A)  $320,000. 
B)  $800,000. 
C)  $345,450. 
D)  zero - there is a $11.18 million exemption equivalent. 
E)  None of the choices are correct. The amount of tax cannot be estimated without the use of a tax rate schedule.

Question 9

Only complete gifts are subject to the Federal gift tax.

Accepted Answer

A) True 
 B)False

Question 10

A transfer of cash to a bank account held in joint tenancy with the right of survivorship is not a completed gift.

Accepted Answer

A) True 
 B)False

Question 11

Madison was married at the time of her death and her gross estate consisted of $22 million in stock and bonds. Madison left all of her property to her spouse. What is the result?

Accepted Answer

A)  Madison's taxable estate will be zero. 
B)  Madison's surviving spouse will have an income tax basis in the inherited property of zero. 
C)  Madison's adjusted gross estate will be zero. 
D)  Madison's estate will have a tentative estate tax of zero. 
E)  None of the choices are correct. 
A)  Madison's taxable estate will be zero. 
B)  Madison's surviving spouse will have an income tax basis in the inherited property of zero. 
C)  Madison's adjusted gross estate will be zero. 
D)  Madison's estate will have a tentative estate tax of zero. 
E)  None of the choices are correct.

Question 12

This year Maria transferred $600,000 to an irrevocable trust that pays equal shares of income annually to four cousins (or their estates) for the next eight years. At that time, the trust is terminated and the corpus of the trust reverts to Maria. Determine the amount, if any, of the current gifts and the taxable gifts if the relevant interest rate is 6 percent and Maria is married and elects to gift-split with her spouse?

Accepted Answer

$51,771 for Maria and $51,771 for Maria'

Question 13

Grace transferred $800,000 into trust with the income to be paid annually to her spouse, Isaiah, for life and the remainder to Taylor. Calculate the amount of the taxable gifts from the transfers.

Accepted Answer

$785,000
The life estate is not eligible

Question 14

At her death Emily owned real estate worth $2.5 million and other property worth $10 million. Property taxes of $200,000 were accrued on the real estate at the time of Emily's death. Which of the following is a True statement with respect to these items without considering any other owned property?

Accepted Answer

A)  Emily's gross estate is $12.3 million. 
B)  Emily's taxable estate is $12.5 million. 
C)  Emily's adjusted gross estate is $12.3 million. 
D)  Emily's estate tax base is $12.5 million. 
E)  None of the choices are True. 
A)  Emily's gross estate is $12.3 million. 
B)  Emily's taxable estate is $12.5 million. 
C)  Emily's adjusted gross estate is $12.3 million. 
D)  Emily's estate tax base is $12.5 million. 
E)  None of the choices are True.

Question 15

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 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

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 18

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.

Accepted Answer

$1,013,440
The top transfer tax rate is

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

The marital and charitable deductions are common to both the estate tax and the gift tax formulas.

Accepted Answer

A) True 
 B)False

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

This year, Brent by himself purchased season baseball tickets in the exclusive sky club. The price of the tickets was $60,000, and Brent divided the tickets equally with his two brothers (Brent gave one-third of the tickets to each brother). Has Brent made a taxable gift and, if so, in what amount?

Life insurance is an asset that can be used to fund a trust to support a surviving spouse and, yet, may not be included in the decedent's gross estate.

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?

A future interest is a right to receive income or property in the future.

The gross estate may contain property transfers that are not included in the probate estate.

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 tenants in common or as joint tenants with the right of survivorship.

Only complete gifts are subject to the Federal gift tax.

A transfer of cash to a bank account held in joint tenancy with the right of survivorship is not a completed gift.

Madison was married at the time of her death and her gross estate consisted of $22 million in stock and bonds. Madison left all of her property to her spouse. What is the result?

Grace transferred $800,000 into trust with the income to be paid annually to her spouse, Isaiah, for life and the remainder to Taylor. Calculate the amount of the taxable gifts from the transfers.

At her death Emily owned real estate worth $2.5 million and other property worth $10 million. Property taxes of $200,000 were accrued on the real estate at the time of Emily's death. Which of the following is a True statement with respect to these items without considering any other owned property?

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

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?

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

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

The marital and charitable deductions are common to both the estate tax and the gift tax formulas.

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 that can only exist for a year.

This year, Brent by himself purchased season baseball tickets in the exclusive sky club. The price of the tickets was $60,000, and Brent divided the tickets equally with his two brothers (Brent gave one-third of the tickets to each brother). Has Brent made a taxable gift and, if so, in what amount?

Life insurance is an asset that can be used to fund a trust to support a surviving spouse and, yet, may not be included in the decedent's gross estate.

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?

A future interest is a right to receive income or property in the future.

The gross estate may contain property transfers that are not included in the probate estate.

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 tenants in common or as joint tenants with the right of survivorship.

Only complete gifts are subject to the Federal gift tax.

A transfer of cash to a bank account held in joint tenancy with the right of survivorship is not a completed gift.

Madison was married at the time of her death and her gross estate consisted of $22 million in stock and bonds. Madison left all of her property to her spouse. What is the result?

Grace transferred $800,000 into trust with the income to be paid annually to her spouse, Isaiah, for life and the remainder to Taylor. Calculate the amount of the taxable gifts from the transfers.

At her death Emily owned real estate worth $2.5 million and other property worth $10 million. Property taxes of $200,000 were accrued on the real estate at the time of Emily's death. Which of the following is a True statement with respect to these items without considering any other owned property?

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

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?

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

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

The marital and charitable deductions are common to both the estate tax and the gift tax formulas.

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