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Exam 14: Transfer Taxes and Wealth Planning

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Question 21

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Christopher's residence was damaged by a storm during the administration of his estate. Christopher's executor paid $120,000 to repair the residence after the storm. Which of the following is a true statement?

A) A casualty loss of $120,000 can be deducted on Christopher's final individual income tax return.
B) The casualty loss deduction is limited to the loss in excess of 10 percent of Christopher's AGI.
C) Christopher's executor can deduct a loss of $120,000 on the estate tax return.
D) No casualty loss deduction is available for calculating the estate tax.
E) None of the choices are true.

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

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Question 22

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Ricardo transferred $1,225,000 of cash to State University for a new sports complex. Calculate the amount of the taxable gift.

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Zero.
The gift qualifies for an annual e...

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Question 23

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This year Don and his son purchased real estate for an investment. The price of the property was $500,000, and the title named Don and his son as joint tenants with the right of survivorship. Don provided $320,000 of the purchase price and his son provided the remaining $180,000. Has Don made a taxable gift and, if so, in what amount?

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

At his death Jose owned real estate worth $22 million but subject to a mortgage of $7 million. Which of the following is a true statement?

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

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

For the holidays, Samuel gave a necklace worth $35,250 to Jennifer and jewelry worth $57,000 to Savannah. Samuel is married to Wendy and they live in a community-property state. Has Samuel made any taxable gifts and, if so, in what amounts?

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?

Jonathan transferred $90,000 of cash to a trust this year for the benefit of Hannah, age 10. The trustee has the discretion to distribute income or corpus (principal) for Hannah's benefit and is required to distribute all assets to Hannah (or her estate) not later than Hannah's 21 ^st birthday. 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?

For the holidays, Samuel gave a necklace worth $35,000 to Jennifer and jewelry worth $44,000 to Savannah. Samuel is married to Wendy and they live in a community-property state. Has Samuel made any taxable gifts and, if so, in what amounts?

Which of the following transfers is a complete gift?

The annual exclusion eliminates relatively small transfers of present interests in property.

Caleb transferred $115,000 to an irrevocable trust for Avery. The trustee has the discretion to distribute income or corpus for Avery's benefit but is required to distribute all assets to Avery (or his estate) not later than Avery's 21 ^st birthday. What is the amount, if any, of the taxable gift?

Harold and Mary are married and live in a community-property state. During the marriage Harold bought a parcel of real estate for $200,000 in community funds and titled the property in his name alone. Mary died on January 30^th of this year and was survived by Harold, who did not remarry. The parcel of real property was worth $390,000 on January 30^th of this year but was only worth $330,000 at year-end. What amount, if any, is included in Mary's gross estate?

A gratuitous transfer of cash made directly to an individual who uses the entire amount of the cash to pay medical expenses is not subject to a gift tax.

Chloe's gross estate consists of the following property valued at the date of death: Chloe's real estate is encumbered by a mortgage of $450,000, and Chloe's executor paid her funeral costs of $6,000 and charged fees for $24,000. Which of the following is a true statement?

The applicable credit is designed to: