Exam 14: Transfer Taxes and Wealth Planning

A terminable interest in property is any interest that terminates during the current year.

Isaac is married and Isaac and his spouse agree that they want to transfer the maximum amount of cash to each of their four children and six grandchildren. How much cash in total can Isaac and his spouse transfer to his children and grandchildren each year without triggering any taxable gifts?

Life insurance is an asset that can be used to fund a trust to support a surviving spouse and, yet, may not be included in the decedent's gross estate.

A gift tax return does not need to be filed unless the taxpayer has made current gifts in excess of the unified credit. A gift tax return must be filed if aggregate gifts to at least one recipient exceeds the annual exclusion for the year.

Joshua and David purchased real property for $500,000 as equal tenants in common. Although they are listed as equal co-owners, Joshua was only able to provide $200,000 of the purchase price. David treated the additional $100,000 of his contribution to the purchase price as a gift to Joshua. If the property is worth $2.5 million at Joshua's death, what amount would be included in Joshua's estate?

Proceeds of life insurance paid to the decedent's estate due to the death of the decedent are included in the decedent's gross estate even if the decedent had no ownership rights in the policy at the time of death.

The Federal transfer taxes are calculated using cumulative lifetime transfers.

The unified credit is designed to allow a minimum amount of lifetime transfers without triggering the imposition of a transfer tax. The unified credit currently eliminates tax on cumulative transfers of $5.45 million ($10.9 million for married taxpayers in 2016).

A gratuitous transfer of property made during the lifetime of the donor is called:

This year Nicholas earned $500,000 and used it to purchase land in joint tenancy with a right of survivorship with Nevaeh. Has Nicholas made a taxable gift to Nevaeh and, if so, in what amount?

Property inherited from a decedent has an adjusted basis equal to the value of the property included in the decedent's estate.

Which of the following statements is(are) true for both gratuitous and testamentary transfers?

At his death Titus had a gross estate consisting of $6 million of property. Which of the following is a true statement about Titus' estate or estate tax?

The exemption equivalent was repealed in 1976.

The probate estate will include the total value of all real property owned by the decedent at the time of death regardless of whether the decedent co-owned the property as tenants in common or as joint tenants with the right of survivorship.

This year, Brent by himself purchased season baseball tickets in the exclusive sky club. The price of the tickets was $60,000, and Brent divided the tickets equally with his two brothers (Brent gave one-third of the tickets to each brother). Has Brent made a taxable gift and, if so, in what amount?

Jayden gave Olivia a ring when she agreed to marry him. The ring is a family heirloom valued at $67,000. What is the amount of the taxable gift?

At her death Siena owned real estate worth $200,000 that was titled with her sister in joint tenancy with the right of survivorship. Siena contributed $50,000 to the total cost of the property and her sister contributed the remaining $75,000. What amount, if any, is included in Siena's gross estate?

Which of the following transactions would not utilize the "Section 7520 rate" to calculate the value of the transfer?

James and Jasmine live in a community property state. This year they transferred $800,000 of property to an irrevocable trust that provides their son, Aaron, a life estate and their daughter, Lauren, the remainder. At the time of the gift, the Table S value for Aaron was .18031. What is the amount, if any, of the taxable gifts?