Exam 12: The Gift Tax

Karen purchased a beach house for $300,000 and immediately titled it in the names of Karen and Kenny,as joint tenants with right of survivorship.Karen and Kenny are not married.Did a gift occur? If so,for what amount?

The gift tax is a wealth transfer tax that applies to transfers during a person's lifetime and transfers at death.

In the current year,Cesar,who is single,gives $26,000 to each of his 20 nieces and nephews for a total property transfer of $520,000.Cesar's taxable gifts total

Phil transfers $50,000 to a revocable trust benefiting his son,Josh.The transfer is a taxable gift.

Ed gives Steve land with an adjusted basis of $40,000 and an FMV of $90,000.Ed paid no gift tax.Ed then inherits the same land back from Steve at Steve's death eight months later.At Steve's death,the land is worth $120,000.Ed's basis in the land becomes

Describe the penalties for undervaluing gifts on a gift tax return.

In 2014,Letty makes taxable gifts totaling $4 million.Her only other taxable gifts amount to $1 million,all of which were made in 2009.What is Letty's 2012 gift tax liability before the unified credit?

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

In the current year,Bonnie,who is single,sells stock valued at $60,000 to Linda for $15,000.Later that year,Bonnie gives Linda $25,000 in cash.Bonnie's taxable gifts from these transfers total

Which of the following statements is true?

Gloria makes the following gifts during the year: $15,000 cash to her son,Andy Stock with a basis of $10,000 and a $30,000 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?

In November 1976,Grant uses $30,000 of the specific exemption available at that time.The unified credit available to Grant for post-1976 transfers is reduced by

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

Mia makes a taxable gift when she makes her mother a joint owner on Mia's bank account.Mia has $25,000 in the account.

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

Jennifer and Terry,a married couple,live in Illinois; which is a common law state.In the current year,Terry gives his sister $200,000 cash.Jennifer and Terry agree to gift splitting.Neither Jennifer nor Terry has made any taxable gifts in prior years.What are Jennifer and Terry's taxable gifts?

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

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?

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

Mike transfers securities to an irrevocable trust and gives Rachel the power to determine who will receive the trust's income and assets.Rachel,her estate,and her creditors cannot be beneficiaries or receive the trust assets.Rachel has a general power of appointment.