Question 1

Which of the following statements is true?

Accepted Answer

A)  If the donor does not pay the gift tax, the donee is personally liable for the tax. 
B)  When a married couple elects gift splitting, each spouse is potentially liable for 50% of the gift tax. 
C)  Gift tax returns are due March 15 in the year following the gift. 
D)  Donors can request an automatic extension of time to pay their gift tax even when they don't request to have an income tax extension. 
A)  If the donor does not pay the gift tax, the donee is personally liable for the tax. 
B)  When a married couple elects gift splitting, each spouse is potentially liable for 50% of the gift tax. 
C)  Gift tax returns are due March 15 in the year following the gift. 
D)  Donors can request an automatic extension of time to pay their gift tax even when they don't request to have an income tax extension. A

Question 2

Ida sells some stock to Mae for $20,000 at a time when the stock is valued at $50,000.Later in the year,she gives Mae $15,000 in cash.
a)What is the amount of Ida's taxable gifts?
b)How would your answer to Part (a)change if Ida gave the cash to Jonathan instead of to Mae?

Accepted Answer

a)Ida made gifts of $45,000 [($50,000 - $20,000)+ $15,000] to Mae.Ida receives an annual exclusion of $14,000.Ida's taxable gifts are $12,000.
b)Ida's taxable gift to Mae is $17,000 [($50,000 - $20,000)- $14,000] and to Jonathan is $1,000 ($15,000 - $14,000).Total taxable gifts for Ida are $17,000.

Question 3

Marilyn and Earl establish a trust benefiting their grandchild,Courtney,age 4.Courtney is to receive the accumulated income and corpus when she reaches age 30.In the year of the transfer,Courtney has a two-week period in which to request distributions.This trust is a

Accepted Answer

A)  2503(c) trust. 
B)  Clifford trust. 
C)  Crummey trust. 
D)  none of the above 
A)  2503(c) trust. 
B)  Clifford trust. 
C)  Crummey trust. 
D)  none of the above C

Question 4

Identify which of the following statements is true.

Accepted Answer

A)  The gift tax is a wealth transfer tax that applies to transfers during a person's lifetime and transfers at death. 
B)  The gift tax is not a part of the unified transfer tax system. 
C)  Under the unified transfer tax system, taxable gifts made after 1976 are included in the donor's death tax base. 
D)  All of the above are false. 
A)  The gift tax is a wealth transfer tax that applies to transfers during a person's lifetime and transfers at death. 
B)  The gift tax is not a part of the unified transfer tax system. 
C)  Under the unified transfer tax system, taxable gifts made after 1976 are included in the donor's death tax base. 
D)  All of the above are false.

Question 5

Hu makes a gift of his home to a local homeless shelter (a 501(c)(3)charity).Hu will retain his home for 10 years,after which the homeless shelter will take possession.The value of Hu's 10-year interest is $30,000 and the remainder interest is valued at $120,000.Which of the following statements is correct?

Accepted Answer

A)  Hu is allowed a charitable deduction on his gift tax return for $150,000 in the current year. 
B)  Hu is allowed an exclusion of $12,000 on his gift of $120,000 to the charity. 
C)  Hu is not allowed to deduct the contribution until the charity takes possession in 10 years. 
D)  Hu has a charitable contribution deduction of $120,000 on his current gift tax return. 
A)  Hu is allowed a charitable deduction on his gift tax return for $150,000 in the current year. 
B)  Hu is allowed an exclusion of $12,000 on his gift of $120,000 to the charity. 
C)  Hu is not allowed to deduct the contribution until the charity takes possession in 10 years. 
D)  Hu has a charitable contribution deduction of $120,000 on his current gift tax return.

Question 6

Identify which of the following statements is true.

Accepted Answer

A)  If the annual exclusion for gifts is not used in the current year, the unused portion can be carried forward to subsequent years. 
B)  Individuals may not give more than $14,000 per person in gifts each year before being taxed on the transfer. 
C)  For transfer tax purposes, both the charitable contribution deduction and the marital deduction are unlimited. 
D)  All of the above are false. 
A)  If the annual exclusion for gifts is not used in the current year, the unused portion can be carried forward to subsequent years. 
B)  Individuals may not give more than $14,000 per person in gifts each year before being taxed on the transfer. 
C)  For transfer tax purposes, both the charitable contribution deduction and the marital deduction are unlimited. 
D)  All of the above are false.

Question 7

The annual exclusion permits donors to make gifts of $14,000 each to multiple donees.

Accepted Answer

A) True 
 B)False

Question 8

What is the due date for the gift tax return? Are there any exceptions? If so,what are they?

Accepted Answer

Gifts always are reportable on a calenda

Question 9

On September 1,George transfers his entire ownership rights in a $250,000 life insurance policy on his own life to his sister,Sally.The policy's interpolated terminal reserve is $30,000 as of September 1.On July 1,George had paid the policy's $6,000 annual premium.What are the gift tax consequences,if any?

Accepted Answer

George is considered to have made a gift

Question 10

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?

Accepted Answer

Connie is considered to have made a gift

Question 11

The computation of the gift tax liability for a current year

Accepted Answer

A)  is made without reference to previous years. 
B)  requires the use of current-year tax rates only. 
C)  requires the use of different rates, depending on when the gifts were made. 
D)  requires knowledge of the total gift taxes paid in previous years. 
A)  is made without reference to previous years. 
B)  requires the use of current-year tax rates only. 
C)  requires the use of different rates, depending on when the gifts were made. 
D)  requires knowledge of the total gift taxes paid in previous years.

Question 12

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

Accepted Answer

A)  no loss. 
B)  a $4,000 loss. 
C)  a $14,000 loss. 
D)  none of the above 
A)  no loss. 
B)  a $4,000 loss. 
C)  a $14,000 loss. 
D)  none of the above

Question 13

Identify which of the following statements is true.

Accepted Answer

A)  The trustee of a Sec. 2503(c) trust must distribute all of the corpus and accumulated income when the beneficiary reaches the age of 25. 
B)  The gift tax exclusion is available for a gift of a present or future interest. 
C)  A "Crummey demand power" in a trust document allows the donor to demand a distribution from the trust in years in which assets are transferred to the trust. 
D)  All of the above are true. 
A)  The trustee of a Sec. 2503(c) trust must distribute all of the corpus and accumulated income when the beneficiary reaches the age of 25. 
B)  The gift tax exclusion is available for a gift of a present or future interest. 
C)  A "Crummey demand power" in a trust document allows the donor to demand a distribution from the trust in years in which assets are transferred to the trust. 
D)  All of the above are true.

Question 14

Virginia gave stock with an adjusted basis of $8,000 and an FMV of $10,000 to Carmen.No gift tax was paid on the transfer.Carmen then sold the stock for $9,000.The gain or loss Carmen will recognize on the sale is

Accepted Answer

A)  $2,000 gain. 
B)  $1,000 gain. 
C)  $1,000 loss. 
D)  none of the above 
A)  $2,000 gain. 
B)  $1,000 gain. 
C)  $1,000 loss. 
D)  none of the above

Question 15

Elaine loaned her brother,Mike,$175,000 to purchase a new home.Elaine does not charge Mike any interest on the loan.What are the tax consequences to Elaine and Mike?

Accepted Answer

A)  Elaine is treated as having made a gift of the forgone interest on the $175,000 loan to Mike. 
B)  Elaine only has to impute interest on $75,000 of the loan to Mike. 
C)  If Mike has no net investment income, Elaine does not have to treat the forgone interest as a gift. 
D)  Mike can deduct the interest that he is deemed to have paid Elaine. 
A)  Elaine is treated as having made a gift of the forgone interest on the $175,000 loan to Mike. 
B)  Elaine only has to impute interest on $75,000 of the loan to Mike. 
C)  If Mike has no net investment income, Elaine does not have to treat the forgone interest as a gift. 
D)  Mike can deduct the interest that he is deemed to have paid Elaine.

Question 16

In October 1976,Marian made a large taxable gift.It was her first gift.Marian used her $30,000 specific exemption to reduce her taxable gift amount.What impact does this gift have on her unified credit and death tax base?

Accepted Answer

Marian's unified credit is red

Question 17

In the current year,Martha makes the transfers below to her husband,Ryan.What is the amount,if any,of her marital deduction?
a)In August,she gives him a house valued at $250,000.
b)In December,she gives him a 15-year income interest in a trust with the bank name as trustee.She names her son as the remainderman.The trust is irrevocable and is funded with $500,000 of assets,and 8% is the applicable interest rate.

Accepted Answer

a)The marital deduction is $236,000 ($25

Question 18

A husband transfers $90,000 by gift directly to his wife.The marital deduction for the transfer is

Accepted Answer

A)  $0 unless he elects to claim one. 
B)  $90,000. 
C)  $76,000. 
D)  none of the above 
A)  $0 unless he elects to claim one. 
B)  $90,000. 
C)  $76,000. 
D)  none of the above

Question 19

Donna transfers $200,000 of property to an irrevocable trust with a bank as trustee.Donna names Toby (age 60)to receive all of the trust income for the rest of his life.At Toby's death,the property is to pass to Al or Al's estate.What kind of interest do Toby and Al possess?

Accepted Answer

Toby has a present i

Question 20

Contrast the Crummey trust with the Sec.2503(c)trust.

Accepted Answer

Contributions to both discretionary trus

Which of the following statements is true?

Ida sells some stock to Mae for $20,000 at a time when the stock is valued at $50,000.Later in the year,she gives Mae $15,000 in cash. a)What is the amount of Ida's taxable gifts? b)How would your answer to Part (a)change if Ida gave the cash to Jonathan instead of to Mae?

Marilyn and Earl establish a trust benefiting their grandchild,Courtney,age 4.Courtney is to receive the accumulated income and corpus when she reaches age 30.In the year of the transfer,Courtney has a two-week period in which to request distributions.This trust is a

Identify which of the following statements is true.

Identify which of the following statements is true.

The annual exclusion permits donors to make gifts of $14,000 each to multiple donees.

What is the due date for the gift tax return? Are there any exceptions? If so,what are they?

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?

The computation of the gift tax liability for a current year

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

Identify which of the following statements is true.

Virginia gave stock with an adjusted basis of $8,000 and an FMV of $10,000 to Carmen.No gift tax was paid on the transfer.Carmen then sold the stock for $9,000.The gain or loss Carmen will recognize on the sale is

Elaine loaned her brother,Mike,$175,000 to purchase a new home.Elaine does not charge Mike any interest on the loan.What are the tax consequences to Elaine and Mike?

In October 1976,Marian made a large taxable gift.It was her first gift.Marian used her $30,000 specific exemption to reduce her taxable gift amount.What impact does this gift have on her unified credit and death tax base?

A husband transfers $90,000 by gift directly to his wife.The marital deduction for the transfer is

Donna transfers $200,000 of property to an irrevocable trust with a bank as trustee.Donna names Toby (age 60)to receive all of the trust income for the rest of his life.At Toby's death,the property is to pass to Al or Al's estate.What kind of interest do Toby and Al possess?

Contrast the Crummey trust with the Sec.2503(c)trust.

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

US Corporations

The Estate Tax

Income Taxation of Trusts and Estates

Administrative Procedures

US Taxation of Foreign-Related Transactions

Filters

Exam 12: The Gift Tax

Which of the following statements is true?

Ida sells some stock to Mae for $20,000 at a time when the stock is valued at $50,000.Later in the year,she gives Mae $15,000 in cash. a)What is the amount of Ida's taxable gifts? b)How would your answer to Part (a)change if Ida gave the cash to Jonathan instead of to Mae?

Marilyn and Earl establish a trust benefiting their grandchild,Courtney,age 4.Courtney is to receive the accumulated income and corpus when she reaches age 30.In the year of the transfer,Courtney has a two-week period in which to request distributions.This trust is a

Identify which of the following statements is true.

Identify which of the following statements is true.

The annual exclusion permits donors to make gifts of $14,000 each to multiple donees.

What is the due date for the gift tax return? Are there any exceptions? If so,what are they?

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?

The computation of the gift tax liability for a current year

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

Identify which of the following statements is true.

Virginia gave stock with an adjusted basis of $8,000 and an FMV of $10,000 to Carmen.No gift tax was paid on the transfer.Carmen then sold the stock for $9,000.The gain or loss Carmen will recognize on the sale is

Elaine loaned her brother,Mike,$175,000 to purchase a new home.Elaine does not charge Mike any interest on the loan.What are the tax consequences to Elaine and Mike?

In October 1976,Marian made a large taxable gift.It was her first gift.Marian used her $30,000 specific exemption to reduce her taxable gift amount.What impact does this gift have on her unified credit and death tax base?

A husband transfers $90,000 by gift directly to his wife.The marital deduction for the transfer is

Donna transfers $200,000 of property to an irrevocable trust with a bank as trustee.Donna names Toby (age 60)to receive all of the trust income for the rest of his life.At Toby's death,the property is to pass to Al or Al's estate.What kind of interest do Toby and Al possess?

Contrast the Crummey trust with the Sec.2503(c)trust.

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

US Corporations

The Estate Tax

Income Taxation of Trusts and Estates

Administrative Procedures

US Taxation of Foreign-Related Transactions

Filters