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Exam 14: Transfer Taxes and Wealth Planning

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Question 31

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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 B)
G) C) and E)

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Question 32

Multiple Choice

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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?

A) Don has made a taxable gift of $205,000.
B) Don has made a taxable gift of $70,000.
C) Don has made a taxable gift of $22,000.
D) Don has made a taxable gift of $55,000.
E) None of the choices are correct - Don did not make a taxable gift.

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

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Question 33

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A serial gift strategy uses multiple gifts to maximize the value of the annual exclusion.

At his death in 2018, Nathan owned the following property: The real estate is subject to a $1,700,000 mortgage and Nathan made taxable gifts in 2009 totaling $2 million at which time he offset the gift tax with an applicable credit (exemption equivalent of $2 million). Nathan has never been married. What is the amount of his estate tax due? (Use Exhibit 25-1)

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?

For 2018, the exemption equivalent for the estate tax is $11.18 million.

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

The applicable credit is designed to allow a minimum amount of lifetime transfers without triggering the imposition of a transfer tax.

A couple who is married at the time of completing a gift can elect to file a joint gift tax return.

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

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?

A trust is a legal entity whose purpose is to hold and administer property for the benefit of beneficiaries. 

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?

An exemption equivalent is the amount of annual gifts that is automatically exempt from the gift tax.

At her death Tricia owned a life insurance policy on her life that paid her daughter $500,000 upon her death. The policy was only valued at $25,000 prior to Tricia's death. What amount, if any, is included in Tricia's gross estate?

In order for a transfer to be treated as a completed gift the transfer must be irrevocably relinquished by the donor.

Tracey is unmarried and owns $17 million in stock and bonds. What is the result if Tracey dies this year and leaves all of her property to a qualified charity?

The amount of the estate tax is directly related to the amount of taxable gifts.

The estate tax is imposed on testamentary transfers.

Which of the following is a True statement?