Exam 12: The Gift Tax

Connie has some acreage that is valued at $1,500,000.Her daughter would like to build a home on it,but can only afford $500,000.Connie agrees to sell it to her daughter for $500,000.Is there any gift tax consequence as a result of this transaction?

Identify which of the following statements is true.

In the current year,Melanie makes two transfers to Peter,her husband.In June,she gives him land valued at $50,000.In December,she transfers $500,000 to a trust with a bank named as trustee.All income must be paid to Peter monthly for life.At Peter's death,the property passes to their children.Compute the maximum marital deduction assuming Melanie makes the appropriate elections.

Yuli wants to help his adult grandson,Jerry,become a CPA.He pays all of Jerry's tuition this year,which totals $20,000.He also pays $9,000 for Jerry's room and board at school.Yuli makes the payments directly to the school.What are the gift tax consequences?

On March 1,Bruce transfers $300,000 to a revocable trust with Sprint Bank as trustee.The trustee must pay out all the income to Sam during Sam's lifetime.At Sam's death,the property is to be paid to Sam Jr.On December 31,the trustee distributes $40,000 of income to Sam.What date did a gift occur? What was the amount of the gift?

On July 1,Frank loans his brother Matt $200,000.The loan is evidenced by an interest-free demand note.The loan is still outstanding on December 31.The applicable interest rate is 12%.Frank is treated as having made a gift of

Sandra,who is married,creates an irrevocable trust in the amount of $200,000 for her 18-year-old daughter,Kelly.She names the bank as trustee.Before Kelly reaches age 21,the trustee may pay the income to Kelly.Kelly will receive any undistributed assets when she reaches age 21.If Kelly dies before age 21,the assets will be paid to her estate.In addition,Sandra creates an irrevocable trust for her son,Kevin,age 21.He is entitled to withdraw up to $28,000 per year.Sandra contributes $28,000 in the current year.Sandra elects gift splitting with her husband.Her husband makes no gifts in the current year.Sandra's annual exclusions to be claimed on her gift tax return total

What are the requirements for classifying a transaction as a transfer of a qualified terminable interest property (QTIP)?

Miguel gives Roberta land with an adjusted basis of $50,000 and an FMV of $40,000.No gift tax is paid.Roberta sells the land for $36,000.Roberta recognizes

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

Terry is considering transferring assets valued at $400,000 to an irrevocable trust for the benefit of her son,Cliff,age 15,with First National Bank as trustee.Her attorney has drafted a trust agreement that provides that Cliff is to receive income at the trustee's discretion for the next 20 years and that at age 35,the trust assets will be distributed equally between Cliff and his sister Joanna.Terry anticipates that her husband will consent to gift splitting.What tax issues should Terry and her husband consider with respect to the trust she is creating?

Identify which of the following statements is true.

Identify which of the following statements is true.

A split-interest gift transfer

Interest-free or below-market loans

Barbara sells a house with an FMV of $170,000 to her daughter for $120,000.From this transaction,Barbara is deemed to have made a gift (before the annual exclusion)of

Which of the following transactions constitutes a completed gift made by Ellen,a widow,in the current year?

Discuss the purpose of the gift tax annual exclusion.

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.Calvin's interest is

On April 1,Martha opens a joint bank account with Ned and deposits $1,000.Ned deposits $500 into the account on April 2.On May 2,Martha withdraws $750.Two days later,Ned withdraws $600.