Question 1

Interest-free or below-market loans

Accepted Answer

A) must always have interest imputed on them. 
B) may result in treating the borrower as paying interest. 
C) result in treating the entire loan proceeds as a gift. 
D) will always result in at least $1,000 of interest income being imputed. 
A) must always have interest imputed on them. 
B) may result in treating the borrower as paying interest. 
C) result in treating the entire loan proceeds as a gift. 
D) will always result in at least $1,000 of interest income being imputed.

Question 2

Kenny is thinking of making a substantial gift of stock to his fiancée, Maria. The wedding is scheduled for October 1 of the current year. Kenny already has exhausted his unified credit. He also is considering giving $26,000 cash this year to each of his three children by a previous marriage. What tax issues should Kenny consider with respect to the gifts he plans to make to Maria and his three children?

Accepted Answer

• Will the gift to Maria be eligible for

Question 3

Identify which of the following statements is true.

Accepted Answer

A) The creation of a joint bank account constitutes a taxable gift. 
B) The creation of a joint tenancy by one person will result in a gift equal to the other joint tenant's pro rata interest in the property. 
C) The naming of a life insurance policy beneficiary constitutes a gift for transfer tax purposes. 
D) Since municipal bond interest is exempt from federal income taxation, gifting the bonds escapes the gift tax. 
A) The creation of a joint bank account constitutes a taxable gift. 
B) The creation of a joint tenancy by one person will result in a gift equal to the other joint tenant's pro rata interest in the property. 
C) The naming of a life insurance policy beneficiary constitutes a gift for transfer tax purposes. 
D) Since municipal bond interest is exempt from federal income taxation, gifting the bonds escapes the gift tax.

Question 4

Identify which of the following statements is true.

Accepted Answer

A) A taxable gift may occur when property is sold in an arm's length transaction for less than its FMV. 
B) An individual can inadvertently make a gift by underestimating a property's fair market value and selling it to a relative for a price below its fair market value. 
C) The statutory exemption from the gift tax for payments for medical care requires that the payment be made for a relative. 
D) All of the above are false. 
A) A taxable gift may occur when property is sold in an arm's length transaction for less than its FMV. 
B) An individual can inadvertently make a gift by underestimating a property's fair market value and selling it to a relative for a price below its fair market value. 
C) The statutory exemption from the gift tax for payments for medical care requires that the payment be made for a relative. 
D) All of the above are false.

Question 5

Discuss the statutory exemptions from the gift tax.

Accepted Answer

Payments of medical expenses and college

Question 6

Identify which of the following statements is false.

Accepted Answer

A) The interpolated terminal reserve is similar to a life insurance policy's cash surrender value. 
B) A gift occurs when the owner of an insurance policy irrevocably assigns all ownership rights in the policy to another. 
C) The payment of premiums on an insurance policy that is owned by another does not constitute a gift. 
D) The value of the gift of a life insurance policy is the amount it would cost to purchase a comparable policy on the date of the gift. 
A) The interpolated terminal reserve is similar to a life insurance policy's cash surrender value. 
B) A gift occurs when the owner of an insurance policy irrevocably assigns all ownership rights in the policy to another. 
C) The payment of premiums on an insurance policy that is owned by another does not constitute a gift. 
D) The value of the gift of a life insurance policy is the amount it would cost to purchase a comparable policy on the date of the gift.

Question 7

Gift tax returns are filed on a calendar-year basis.

Accepted Answer

A) True 
 B)False

Question 8

What is a "net gift" and what is the potential income tax problem associated with making a net gift?

Accepted Answer

A potential donor who wants to freeze a

Question 9

Jack transfers property worth $250,000 to a revocable trust on January 1. Two-and-a-half years later, when the property is worth $300,000, the trust becomes irrevocable. Which of the following statements is correct?

Accepted Answer

A) A $300,000 gift occurs when the trust became irrevocable. 
B) A $250,000 gift occurs when the original transfer was made. 
C) A $250,000 gift occurs when the trust became irrevocable. 
D) Jack may elect which amount to report as a gift. 
A) A $300,000 gift occurs when the trust became irrevocable. 
B) A $250,000 gift occurs when the original transfer was made. 
C) A $250,000 gift occurs when the trust became irrevocable. 
D) Jack may elect which amount to report as a gift.

Question 10

Greg transfers property on August 8 of the current year with an adjusted basis of $40,000 and an FMV of $90,000 to his ex-wife as a property settlement that is part of their divorce agreement. The property settlement agreement and the divorce were both finalized on June 3 of the current year. Greg has made a gift of

Accepted Answer

A) $0. 
B) $40,000. 
C) $80,000. 
D) $90,000. 
A) $0. 
B) $40,000. 
C) $80,000. 
D) $90,000.

Question 11

A net gift occurs when a donor makes a gift subject to the agreement that the recipient agrees to pay the gift tax.

Accepted Answer

A) True 
 B)False

Question 12

Tia funds an irrevocable trust with $100,000, naming Vonda to receive income for life. Tia also grants Vonda a general power of appointment during her life. During the next year, Vonda directs the trustee to give $100,000 to Rick. Which of the following statements is not correct?

Accepted Answer

A) Tia made a $100,000 gift to Rick. 
B) Vonda makes a $100,000 gift to Rick. 
C) Tia has made a gift of $100,000 to Vonda. 
D) Exercising a general power of appointment constitutes a gift. 
A) Tia made a $100,000 gift to Rick. 
B) Vonda makes a $100,000 gift to Rick. 
C) Tia has made a gift of $100,000 to Vonda. 
D) Exercising a general power of appointment constitutes a gift.

Question 13

Identify which of the following statements is true.

Accepted Answer

A) An individual making a qualified disclaimer can determine to whom the disclaimed property will pass. 
B) A qualified disclaimer must be made within six months after (a)the day the property is transferred, or (b)the day the person receiving the property becomes age 21, whichever is later. 
C) One of the tests that a qualified disclaimer must meet is that it must be an irrevocable, unqualified, written refusal to accept property. 
D) All of the above are false. 
A) An individual making a qualified disclaimer can determine to whom the disclaimed property will pass. 
B) A qualified disclaimer must be made within six months after (a)the day the property is transferred, or (b)the day the person receiving the property becomes age 21, whichever is later. 
C) One of the tests that a qualified disclaimer must meet is that it must be an irrevocable, unqualified, written refusal to accept property. 
D) All of the above are false.

Question 14

Identify which of the following statements is true.

Accepted Answer

A) When making a QTIP transfer, the donor does not control who will receive the property on the death of the donee-spouse. 
B) The marital deduction is limited to the amount of the gift that exceeds the annual exclusion. 
C) Claiming the marital deduction on a QTIP transfer is mandatory. 
D) Terminal interests cannot be eligible for the marital deduction. 
A) When making a QTIP transfer, the donor does not control who will receive the property on the death of the donee-spouse. 
B) The marital deduction is limited to the amount of the gift that exceeds the annual exclusion. 
C) Claiming the marital deduction on a QTIP transfer is mandatory. 
D) Terminal interests cannot be eligible for the marital deduction.

Question 15

Discuss the purpose of the gift tax annual exclusion.

Accepted Answer

Congress enacted the annual ex

Question 16

A split-interest gift transfer

Accepted Answer

A) involves two public (charitable)organizations. 
B) involves two present interests. 
C) qualifies for a charitable contribution deduction if the recipient charity receives a guaranteed annuity, which is a present interest. 
D) cannot qualify for a deduction if a future interest is given to a charitable organization. 
A) involves two public (charitable)organizations. 
B) involves two present interests. 
C) qualifies for a charitable contribution deduction if the recipient charity receives a guaranteed annuity, which is a present interest. 
D) cannot qualify for a deduction if a future interest is given to a charitable organization.

Question 17

A "Crummey demand power" in a trust document allows the donor to demand a distribution from the trust in years in which earnings exist within the trust.

Accepted Answer

A) True 
 B)False

Question 18

Calvin transfers land to a trust. Calvin retains the right to the income from the land for the rest of his life. Upon his death, the land is to be transferred to his daughter, Melissa. Melissa's interest is

Accepted Answer

A) a remainder interest. 
B) a life estate. 
C) a reversionary interest. 
D) a term certain. 
A) a remainder interest. 
B) a life estate. 
C) a reversionary interest. 
D) a term certain.

Question 19

Damitria transfers her rights in a $100,000 insurance policy on June 1 to Tremayne. The policy has a cash value of $9,000 and an interpolated terminal reserve of $8,500. The annual policy premium of $12,000 had been paid on January 1. Damitria's gift (before the annual gift tax exclusion)to Tremayne is

Accepted Answer

A) $8,500. 
B) $9,000. 
C) $15,500. 
D) $20,500. 
A) $8,500. 
B) $9,000. 
C) $15,500. 
D) $20,500.

Question 20

Gloria makes the following gifts during the year: $16,000 cash to her son, Andy
Stock with a basis of $10,000 and a $31,000 fair market value to her sister, Helen
$100,000 to a revocable trust benefiting her nephew, George
Land with a basis of $60,000 and a fair market value of $50,000 to the American Cancer Society
Before considering the unified credit, what are Gloria's taxable gifts?

Accepted Answer

A) $17,000 
B) $45,000 
C) $95,000 
D) $121,000 
A) $17,000 
B) $45,000 
C) $95,000 
D) $121,000

Interest-free or below-market loans

Identify which of the following statements is true.

Identify which of the following statements is true.

Discuss the statutory exemptions from the gift tax.

Identify which of the following statements is false.

Gift tax returns are filed on a calendar-year basis.

What is a "net gift" and what is the potential income tax problem associated with making a net gift?

Jack transfers property worth $250,000 to a revocable trust on January 1. Two-and-a-half years later, when the property is worth $300,000, the trust becomes irrevocable. Which of the following statements is correct?

A net gift occurs when a donor makes a gift subject to the agreement that the recipient agrees to pay the gift tax.

Tia funds an irrevocable trust with $100,000, naming Vonda to receive income for life. Tia also grants Vonda a general power of appointment during her life. During the next year, Vonda directs the trustee to give $100,000 to Rick. Which of the following statements is not correct?

Identify which of the following statements is true.

Identify which of the following statements is true.

Discuss the purpose of the gift tax annual exclusion.

A split-interest gift transfer

A "Crummey demand power" in a trust document allows the donor to demand a distribution from the trust in years in which earnings exist within the trust.

Calvin transfers land to a trust. Calvin retains the right to the income from the land for the rest of his life. Upon his death, the land is to be transferred to his daughter, Melissa. Melissa's interest is

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Exam 12: The Gift Tax

Interest-free or below-market loans

Identify which of the following statements is true.

Identify which of the following statements is true.

Discuss the statutory exemptions from the gift tax.

Identify which of the following statements is false.

Gift tax returns are filed on a calendar-year basis.

What is a "net gift" and what is the potential income tax problem associated with making a net gift?

Jack transfers property worth $250,000 to a revocable trust on January 1. Two-and-a-half years later, when the property is worth $300,000, the trust becomes irrevocable. Which of the following statements is correct?

A net gift occurs when a donor makes a gift subject to the agreement that the recipient agrees to pay the gift tax.

Tia funds an irrevocable trust with $100,000, naming Vonda to receive income for life. Tia also grants Vonda a general power of appointment during her life. During the next year, Vonda directs the trustee to give $100,000 to Rick. Which of the following statements is not correct?

Identify which of the following statements is true.

Identify which of the following statements is true.

Discuss the purpose of the gift tax annual exclusion.

A split-interest gift transfer

A "Crummey demand power" in a trust document allows the donor to demand a distribution from the trust in years in which earnings exist within the trust.

Calvin transfers land to a trust. Calvin retains the right to the income from the land for the rest of his life. Upon his death, the land is to be transferred to his daughter, Melissa. Melissa's interest is

Tax Research

Corporate Formations and Capital Structure

The Corporate Income Tax

Corporate Nonliquidating Distributions

Other Corporate Tax Levies

Corporate Liquidating Distributions

Corporate Acquisitions and Reorganizations

Consolidated Tax Returns

Partnership Formation and Operation

Special Partnership Issues

S Corporations

The Estate Tax

Income Taxation of Trusts and Estates

Administrative Procedures

Us Taxation of Foreign-Related Transactions

Filters