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The tax rate schedule on taxable transfers has a maximum tax rate of 40 percent.

A) True
B) False

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When creating an estate tax planning strategy, the income tax benefit derived from a step-up in tax basis on assets should be measured against the estate tax cost of including the assets in the decedent's gross estate.

A) True
B) False

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The gross estate may contain property transfers that are not included in the probate estate.

A) True
B) False

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A trust is a legal entity that can only exist for a year.

A) True
B) False

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A transfer of a terminable interest will not generally qualify for a marital deduction.

A) True
B) False

Correct Answer

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Both spouses must consent to any gift-splitting election.

A) True
B) False

Correct Answer

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Adjusted taxable gifts are added to the taxable estate to accomplish which of the following objectives?


A) Prevent double taxation of previously taxed gifts.
B) Increase the marginal tax rate on previously taxed gifts.
C) Increase the marginal tax rate on the taxable estate.
D) Remove inter vivos transfers from cumulative taxable transfers.
E) None of the choices are correct.

F) D) and E)
G) B) and E)

Correct Answer

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This year Samantha gave each of her three nephews birthday gifts of $10,000 in cash. At Christmas, Samantha gave each of her three nephews Christmas gifts of an additional $6,000 in cash. What is the amount of the taxable gifts, if any, made by Samantha this year?


A) $3,000.
B) $33,000.
C) $48,000.
D) zero-none of the gifts exceed the annual exclusion.
E) None of the choices are correct.

F) A) and C)
G) C) and D)

Correct Answer

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Ashley owns a whole-life insurance policy worth $25,000 that directs the insurance company to pay the beneficiary $500,000 on her death. Ashley pays the annual policy premiums and has the power to designate the beneficiary of the policy. What value of the policy, if any, would be included in Ashley's estate upon her death?

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$500,000.
Because Ashley owned...

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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?

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$235,000.
In a common-law state, Nichola...

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Last year Brandon opened a savings account with a deposit of $45,000. The account was in the name of Brandon and Melanie, who have joint tenancy with the right of survivorship. Melanie did not contribute to the account, but this year she withdrew $18,000. Has Brandon made a taxable gift to Melanie, and if so, in what amount?

Correct Answer

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$3,000.
No gift was made at the time of ...

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The marital and charitable deductions are common to both the estate tax and the gift tax formulas.

A) True
B) False

Correct Answer

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The estate and gift taxes share several common features. Which of the following characteristics is common to both the estate and gift taxes?


A) A marital deduction and a deduction for casualty losses.
B) A marital deduction for transfers of all terminable interests.
C) The tax rate schedule for calculating gross transfer taxes.
D) A charitable deduction and an annual exclusion.
E) None of these choices list characteristics common to both the gift and the estate tax.

F) B) and D)
G) B) and E)

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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?

Correct Answer

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James and Jasmine each made taxable gift...

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Only complete gifts are subject to the federal gift tax.

A) True
B) False

Correct Answer

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At his death Tyrone's life insurance policy paid his estate $85,000. What amount, if any, is included in Tyrone's gross estate?


A) $85,000.
B) $85,000 if Tyrone had an incident of ownership of the policy at the time of his death.
C) zero if Tyrone did not transfer any ownership of the policy within three years of his date of death.
D) zero-life insurance proceeds due to the death of the decedent are not included in the gross estate.
E) zero if Tyrone's estate uses the insurance proceeds to pay Tyrone's estate tax.

F) A) and B)
G) C) and D)

Correct Answer

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Property is included in the gross estate at the value a willing buyer would pay a willing seller, neither being under any compulsion to buy or to sell, and both having reasonable knowledge of the relevant facts.

A) True
B) False

Correct Answer

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Which of the following is a true statement?


A) A serial gift strategy utilizes inter vivos gifts to multiple donees over multiple years to maximize the annual exclusion.
B) A serial gift strategy works well even if the gifts don't qualify as present interests.
C) A bypass trust avoids all estate taxes on the estate of the first spouse to die.
D) The income tax savings from holding appreciated property until death are always outweighed by the additional estate tax imposed on the property.
E) None of the choices are true.

F) C) and D)
G) None of the above

Correct Answer

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At her death Tricia had an adjusted gross estate consisting of $8 million of property. Which of the following is a true statement about Tricia's estate or estate tax?


A) Tricia must have a taxable estate over $8 million.
B) Tricia's taxable estate will not exceed $8 million.
C) Tricia must have a probate estate tax of zero.
D) Tricia must have a gross estate tax of zero.
E) None of the choices are necessarily true.

F) D) and E)
G) A) and D)

Correct Answer

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Which of the following is a complete taxable gift?


A) $20,000 in cash contributed to the committee to reelect Senator BlowHard.
B) $15,000 in cash given directly to Valley Hospital for the care of a neighbor who was in an auto accident.
C) $18,000 in cash given directly to a needy student to pay for college tuition.
D) $55,000 in cash transferred to a former spouse under a written property settlement shortly after a divorce.
E) None of the choices is a complete taxable gift.

F) A) and B)
G) All of the above

Correct Answer

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