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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

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

A) True
B) False

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The generation-skipping tax is designed to accomplish which of the following?


A) Generate additional revenues to supplement the estate tax.
B) Prevent the avoidance of transfer taxes (both estate and gift tax) through transfers that skip a generation of recipients.
C) Eliminate the possibility that the estate tax can be avoided by gifts in contemplation of death.
D) Replace the gift tax on distributions from trusts.
E) None of the choices are correct.

F) A) and B)
G) B) and E)

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

A) True
B) False

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Madison was married at the time of her death and her gross estate consisted of $22 million in stock and bonds.Madison left all of her property to her spouse.What is the result?


A) Madison's taxable estate will be zero.
B) Madison's surviving spouse will have an income tax basis in the inherited property of zero.
C) Madison's adjusted gross estate will be zero.
D) Madison's estate will have a tentative estate tax of zero.
E) None of the choices are correct.

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

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Ricardo transferred $1,000,000 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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Ryan placed $280,000 in trust with income to Stephen for his life and the remainder to Kayla (or her estate).At the time of the gift,given the prevailing interest rate,Stephen's life estate was valued at $165,000 and the remainder at $115,000.What is the amount,if any,of Ryan's taxable gifts?

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$151,000 and $115,000
The life estate is...

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

A) True
B) False

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False

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


A) An applicable credit of up to $14,000 per donee per year reduces the tax on any transfer.
B) An annual exclusion offsets any transfer up to $14,000.
C) An election can be made to split a transfer between spouses.
D) A charitable and a marital deduction are allowed in computing the taxable transfer.
E) All of the choices are true.

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

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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 21st birthday.What is the amount of the taxable gift?


A) $90,000.
B) $76,000.
C) $64,000.
D) zero-there is no completed gift until the trustee makes a distribution from the trust.
E) None of the choices are correct.

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

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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?


A) zero - the marital deduction offsets the gift as long as Jayden and Olivia are married by year end.
B) $53,000.
C) $67,000.
D) zero-this transfer is not gratuitous.
E) None of the choices are correct.

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

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B

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

A) True
B) False

Correct Answer

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This year Maria transferred $600,000 to an irrevocable trust that pays equal shares of income annually to four cousins (or their estates)for the next eight years.At that time,the trust is terminated and the corpus of the trust reverts to Maria.Determine the amount,if any,of the current gifts and the taxable gifts if the relevant interest rate is 6 percent and Maria is married and elects to gift-split with her spouse?

Correct Answer

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$55,771 for Maria and $55,771 for Maria'...

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

A) True
B) False

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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.

A) True
B) False

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The exemption equivalent was repealed in 1976.

A) True
B) False

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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) C) and D)
G) All of the above

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C

The Federal transfer taxes are calculated using cumulative lifetime transfers.

A) True
B) False

Correct Answer

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

A) True
B) False

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Which of the following is a true statement?


A) Executor's fees paid by an estate are deductible in computing the gross estate.
B) Funeral expenses for the decedent paid by an estate are deductible in computing the adjusted gross estate.
C) An executor can choose to deduct the decedent's funeral expenses on either the estate tax return or the estate's income tax return.
D) An executor can only deduct the costs of administering the decedent's estate on the estate's income tax return.
E) None of the choices are true.

F) None of the above
G) All of the above

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