Exam 14: Transfer Taxes and Wealth Planning

The applicable credit is designed to:

This year Don and his son purchased real estate for an investment. The price of the property was $588,000, and the title named Don and his son as joint tenants with the right of survivorship. Don provided $344,000 of the purchase price and his son provided the remaining $244,000. Has Don made a taxable gift and, if so, in what amount?

The gross estate will not include the value of clothes and other personal items owned by the decedent at the time of death.

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?

Adjusted taxable gifts are included when calculating the taxable estate but are not subject to double taxation because a tax credit is provided for taxes payable on adjusted taxable gifts.

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

A transfer of a terminable interest will not generally qualify for a marital deduction.

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?

Adrian owns two parcels of real estate. Parcel #1 is worth $400,000 and Parcel #2 is worth $660,000. Adrian plans to bequeath Parcel #1 directly to his spouse, Sofia, and leave her a life estate in Parcel #2. What amounts will be included in Adrian's taxable estate for these two parcels?

A present interest is the right to currently enjoy property or receive income payments from property.

Harold and Mary are married and live in a community-property state. During the marriage Harold bought a parcel of real estate for $200,000 in community funds and titled the property in his name alone. Mary died on January 30^th of this year and was survived by Harold, who did not remarry. The parcel of real property was worth $390,000 on January 30^th of this year but was only worth $330,000 at year-end. What amount, if any, is included in Mary's gross estate?

For 2020, the exemption equivalent for the estate tax is $11.58 million.

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

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?

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?

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

The gross estate includes the value of half of real property owned by a decedent and spouse in joint tenancy with the right of survivorship.

A gratuitous transfer of cash made directly to an individual who uses the entire amount of the cash to pay medical expenses is not subject to a gift tax.

The annual exclusion eliminates relatively small transfers of present interests in property.

At her death Siena owned real estate worth $200,000 that was titled with her sister in joint tenancy with the right of survivorship. Siena contributed $50,000 to the total cost of the property and her sister contributed the remaining $75,000. What amount, if any, is included in Siena's gross estate?