Exam 12: The Gift Tax

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

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.On July 1 of the subsequent year,George again paid the premium on the policy.What are the gift tax consequences in the subsequent year,if any?

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

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

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

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

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?

Identify which of the following statements is true.

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

Steve gave stock with an adjusted basis of $7,000 and an FMV of $10,000 to Alice.No gift tax was paid.Later,Alice sold the stock for $12,000.The gain Alice will recognize on the sale is

Identify which of the following statements is false.

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?

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

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

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

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?

Identify which of the following statements is true.

Abby transfers $10,000 to a political organization to promote her favorite candidate for president.Does Abby's transfer qualify as a gift?