Exam 12: The Gift Tax

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

George transfers property to an irrevocable trust for the benefit of his adult children and names himself as trustee.The trust document requires the trustee to distribute trust property to the beneficiaries at the trustee's discretion with the possibility of no distribution to certain beneficiaries as the trustee deems appropriate.The trust will terminate at the end of nine years,and the property will pass to George's children.Which of the following statements is correct?

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.

Vincent makes the following property transfers in the current year: • $5,000 tuition for a grandson paid directly to the school • $1,000 medical expense for a child paid directly to a hospital • $500 donation to the Democratic party • $10,000 property settlement in conjunction with a divorce • $3,000 room and board at college for a grandson paid directly to the school Vincent's gifts for the year before considering the annual gift tax exclusion total

Identify which of the following statements is true.

A Sec."2503(c)trust"

Identify which of the following statements is true.

Which of the following transfers is subject to the gift tax?

The purchase of a $15,000 engagement ring generates a taxable gift necessitating the filing of a gift tax return.

Discuss the purpose of the gift tax annual exclusion.

Why are Crummey trusts popular for minors?

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

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.

A gift-splitting election

Calvin transfers land to a trust.His daughter Melissa will receive the income from the land for ten years.After ten years,the land is returned to Calvin.Calvin's interest is

In 2013,Lilly makes taxable gifts aggregating $5.25 million.Her only other taxable gifts amount to $1 million,all of which were made in 1998.What is her gift tax liability?

Identify which of the following statements is true.

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?

Ward and June decide to divorce after 30 years of marriage.Ward transfers $500,000 to June in settlement of her property rights.What are the gift tax consequences of this transfer?

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