Question 1

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

Accepted Answer

A) True 
 B)False

Question 2

Sophia is single and owns the following property: $\begin{array}{lr}
{\text { Description }} & {\text { Value }} \
\text { Real estate property } & \$ 4,500,000 \
\text { Cash, stock, and bonds } & 2,800,000 \
\text { Personal property } & 300,000
\end{array}$ 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

The answer of Sophia is single and owns the following...

Question 3

The Federal transfer taxes are calculated using cumulative lifetime transfers.

Accepted Answer

A) True 
 B)False

Question 4

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

Accepted Answer

A) True 
 B)False

Question 5

Only complete gifts are subject to the Federal gift tax.

Accepted Answer

A) True 
 B)False

Question 6

The gift tax is imposed on inter vivos (lifetime) transfers.

Accepted Answer

A) True 
 B)False

Question 7

Christian transferred $60,000 to an irrevocable trust for the benefit of his three daughters. The three daughters share income equally for five years and then the corpus of the trust is to be divided equally between them. What is the amount of the taxable gifts, if any, made by Christian?

Accepted Answer

A)  $60,000 
B)  $47,000 
C)  $34,000 
D)  $21,000 
E)  None of these - the amount of the taxable gifts cannot be ascertained without valuing each income interest. 
A)  $60,000 
B)  $47,000 
C)  $34,000 
D)  $21,000 
E)  None of these - the amount of the taxable gifts cannot be ascertained without valuing each income interest.

Question 8

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

Accepted Answer

A) True 
 B)False

Question 9

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 these. 
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 these.

Question 10

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

Accepted Answer

A) True 
 B)False

Question 11

Last year Diego transferred a life insurance policy worth $75,000 to an irrevocable trust with directions to distribute the corpus of the trust to his grandson, Juan, upon his graduation from college, or to Juan's estate upon his death. Diego paid $5,000 of gift tax on the transfer of the policy. Early this year, Diego died and the insurance company paid $600,000 to the trust. What amount, if any, is included in Diego's gross estate?

Accepted Answer

The answer of Last year Diego transferred a life insurance...

Question 12

Gabriel had a taxable estate of $6 million when he died in 2014. Calculate the amount of estate tax due (if any) if Gabriel made prior taxable gifts in 2005 totaling $1 million at which time he claimed a unified credit of $1 million and paid no tax. Gabriel was unmarried at his death.

Accepted Answer

The answer of Gabriel had a taxable estate of $6...

Question 13

The unified credit is designed to:

Accepted Answer

A)  apply only to taxable transfers included in the gross estate. 
B)  prevent taxation of cumulative transfers that do not exceed a certain minimum amount. 
C)  apply to amounts not already eliminated by the exemption equivalent. 
D)  exclude up to $1 million for any individual transfer. 
E)  None of these. 
A)  apply only to taxable transfers included in the gross estate. 
B)  prevent taxation of cumulative transfers that do not exceed a certain minimum amount. 
C)  apply to amounts not already eliminated by the exemption equivalent. 
D)  exclude up to $1 million for any individual transfer. 
E)  None of these.

Question 14

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 these. 
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 these.

Question 15

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

The answer of Grace transferred $800,000 into trust with the...

Question 16

This year Carlos and Hailey purchased realty for $480,000 and took title as equal tenants in common. However, Hailey was able to provide only $200,000 of the purchase price and Carlos paid the remaining $280,000. Has Carlos made a taxable gift to Hailey, and if so, in what amount?

Accepted Answer

The answer of This year Carlos and Hailey purchased realty...

Question 17

Jayden gave Olivia a ring when she agreed to marry him. The ring is a family heirloom valued at $67,000. What is the amount of the taxable gift?

Accepted Answer

A)  zero - the marital deduction offsets the gift as long as Jayden and Olivia are married by year end. 
B)  $53,000 
C)  $67,000 
D)  zero - this transfer is not gratuitous. 
E)  None of these. 
A)  zero - the marital deduction offsets the gift as long as Jayden and Olivia are married by year end. 
B)  $53,000 
C)  $67,000 
D)  zero - this transfer is not gratuitous. 
E)  None of these.

Question 18

Chloe's gross estate consists of the following property valued at the date of death: Description$\quad\quad\quad\quad\quad\quad\quad$Value
Real estate $\quad\quad\quad\quad\quad\quad\quad \$ 5,500,000$
Cash, stock, and bonds $\quad\quad\quad1,700,000$
Personal property $\quad\quad\quad\quad\quad 300,000$ Chloe's real estate is encumbered by a mortgage of $450,000, and Chloe's executor paid her funeral costs of $6,000 and charged fees for $24,000. Which of the following is a true statement?

Accepted Answer

A)  Chloe's adjusted gross estate is at least $7,020,000. 
B)  Chloe's taxable estate is at least $7,020,000. 
C)  Chloe's taxable estate is $7,050,000. 
D)  Chloe's estate will calculate the tentative estate tax on $7.5 million. 
E)  None of these is true. 
A)  Chloe's adjusted gross estate is at least $7,020,000. 
B)  Chloe's taxable estate is at least $7,020,000. 
C)  Chloe's taxable estate is $7,050,000. 
D)  Chloe's estate will calculate the tentative estate tax on $7.5 million. 
E)  None of these is true.

Question 19

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

Accepted Answer

A) True 
 B)False

Question 20

A serial gift strategy consists of arranging a trust to maximize the value of the unified credit.

Accepted Answer

A) True 
 B)False

Exam 25: Transfer Taxes and Wealth Planning of the Cfa Institute

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

The Federal transfer taxes are calculated using cumulative lifetime transfers.

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

Only complete gifts are subject to the Federal gift tax.

The gift tax is imposed on inter vivos (lifetime) transfers.

Christian transferred $60,000 to an irrevocable trust for the benefit of his three daughters. The three daughters share income equally for five years and then the corpus of the trust is to be divided equally between them. What is the amount of the taxable gifts, if any, made by Christian?

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

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?

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

Gabriel had a taxable estate of $6 million when he died in 2014. Calculate the amount of estate tax due (if any) if Gabriel made prior taxable gifts in 2005 totaling $1 million at which time he claimed a unified credit of $1 million and paid no tax. Gabriel was unmarried at his death.

The unified credit is designed to:

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

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.

This year Carlos and Hailey purchased realty for $480,000 and took title as equal tenants in common. However, Hailey was able to provide only $200,000 of the purchase price and Carlos paid the remaining $280,000. Has Carlos made a taxable gift to Hailey, and if so, in what amount?

Jayden gave Olivia a ring when she agreed to marry him. The ring is a family heirloom valued at $67,000. What is the amount of the taxable gift?

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

A serial gift strategy consists of arranging a trust to maximize the value of the unified credit.

An Introduction to Tax

Tax Compliance, the Irs, and Tax Authorities

Tax Planning Strategies and Related Limitations

Individual Income Tax Overview, Exemptions, and Filing Status

Gross Income and Exclusions

Individual Deductions

Individual Income Tax Computation and Tax Credits

Business Income, Deductions, and Accounting Methods

Property Acquisition and Cost Recovery

Property Dispositions

Investments

Compensation

Retirement Savings and Deferred Compensation

Tax Consequences of Home Ownership

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 Us Taxation of Multinational Transactions

Filters