Question 1

Which of the following is a true statement about the Federal gift tax return (Form 709) ?

Accepted Answer

A)   Form 709 is due by the 15th day of the ninth month following the date of the gift.
B)   Form 709 must be filed if a taxpayer wishes to elect gift splitting.
C)   Form 709 need not be filed unless a taxpayer's taxable gifts exceed the exemption equivalent.
D)   Form 709 is due nine months after the death of the decedent.
E)   None of the choices are true.F) None of the above
G) A) and B)

Question 2

A gift tax return does not need to be filed unless the taxpayer has made current gifts in excess of the applicable credit.

Accepted Answer

A) True 
 B)False

Question 3

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?

Accepted Answer

$150,000 and $115,000
The life estate is...

Question 4

Andrew and Brianna are married and live in Texas, a community property state. For their birthdays this year Andrew gave cash gifts of $20,000 to each of his two daughters, and Brianna gave $34,000 to her niece. What is the amount of Andrew's taxable gifts?

Accepted Answer

A)   $2,000.
B)   $10,000.
C)   $25,000.
D)   zero only if Andrew and Brianna elect to split gifts.
E)   None of the choices are correct.F) A) and B)
G) None of the above

Question 5

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?

Accepted Answer

A)   $90,000.
B)   $75,000.
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) A) and B)
G) A) and C)

Question 6

Christian transferred $60,000 to an irrevocable trust for the benefit of his three daughters. The three daughters share income equally for five years and then the corpus of the trust is to be divided equally between them. What is the amount of the taxable gifts, if any, made by Christian?

Accepted Answer

A)   $60,000.
B)   $46,000.
C)   $34,000.
D)   $18,000.
E)   None of the choices are correct - the amount of the taxable gifts cannot be ascertained without valuing each income interest.F) B) and D)
G) A) and E)

Question 7

A present interest is the right to currently enjoy property or receive income payments from property.

Accepted Answer

A) True 
 B)False

Question 8

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?

Accepted Answer

A)   $22 million is included in Jose's gross estate.
B)   $15 million is included in Jose's gross estate.
C)   The $7 million mortgage must be paid by Jose's estate.
D)   The $7 million mortgage is not deductible if Jose's will transfers the property to a charity.
E)   All of the choices are correct.F) A) and B)
G) B) and E)

Question 9

The gift-splitting election only applies to gifts made by taxpayers who reside in community property states.

Accepted Answer

A) True 
 B)False

Question 10

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

Accepted Answer

A) True 
 B)False

Question 11

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?

Accepted Answer

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

Question 12

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?

Accepted Answer

A)   Chloe's adjusted gross estate is at least $12,020,000.
B)   Chloe's taxable estate is at least $12,020,000.
C)   Chloe's taxable estate is $12,050,000.
D)   Chloe's estate will calculate the tentative estate tax on $12.5 million.
E)   None of the choices are true.F) C) and D)
G) B) and E)

Question 13

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

Accepted Answer

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) B) and E)
G) C) and E)

Question 14

A future interest is a right to receive income or property in the future.

Accepted Answer

A) True 
 B)False

Question 15

Which of the following is a true statement?

Accepted Answer

A)   Leaving all property to the surviving spouse maximizes the marital deduction and therefore minimizes total transfer taxes on the estates of both spouses.
B)   A bypass provision in the will of the deceased spouse is designed to use the applicable credit of the deceased spouse by transferring property to beneficiaries other than the surviving spouse.
C)   Serial gifts are limited in scope because only $10,000 can be transferred each year tax-free to any specific donee.
D)   Serial gifts can move significant amounts of wealth only if employed by multiple donors.
E)   None of the choices are true.F) All of the above
G) B) and D)

Question 16

The exemption equivalent was repealed in 1976.

Accepted Answer

A) True 
 B)False

Question 17

A serial gift strategy consists of arranging a trust to maximize the value of the applicable credit.

Accepted Answer

A) True 
 B)False

Question 18

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.

Accepted Answer

A) True 
 B)False

Question 19

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

Accepted Answer

A) True 
 B)False

Question 20

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?

Accepted Answer

A)   Brent made a taxable gift of $45,000.
B)   Brent made two taxable gifts of $17,000 each.
C)   Brent transferred the tickets for love and affection so no gift tax is imposed.
D)   Brent made two taxable gifts of $5,000.
E)   None of the choices are correct.F) D) and E)
G) A) and B)

Exam 25: Transfer Taxes and Wealth Planning

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.

Correct Answer
verified

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

Correct Answer
verified

A gift tax return does not need to be filed unless the taxpayer has made current gifts in excess of the applicable credit.

Correct Answer
verified

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?

Correct Answer
verified

A present interest is the right to currently enjoy property or receive income payments from property.

Correct Answer
verified

Christian transferred $60,000 to an irrevocable trust for the benefit of his three daughters. The three daughters share income equally for five years and then the corpus of the trust is to be divided equally between them. What is the amount of the taxable gifts, if any, made by Christian?

Correct Answer
verified

Which of the following is a true statement about the Federal gift tax return (Form 709) ?

Correct Answer
verified

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

Correct Answer
verified

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?

Correct Answer
verified

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

Correct Answer
verified

The gift-splitting election only applies to gifts made by taxpayers who reside in community property states.

Correct Answer
verified

A serial gift strategy consists of arranging a trust to maximize the value of the applicable credit.

Correct Answer
verified

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?

Correct Answer
verified
$150,000 and $115,000
The life estate is...
View Answer

Andrew and Brianna are married and live in Texas, a community property state. For their birthdays this year Andrew gave cash gifts of $20,000 to each of his two daughters, and Brianna gave $34,000 to her niece. What is the amount of Andrew's taxable gifts?

Correct Answer
verified

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?

Correct Answer
verified

Correct Answer
verified

The exemption equivalent was repealed in 1976.

Correct Answer
verified

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?

Correct Answer
verified

Which of the following is a true statement?

Correct Answer
verified

A future interest is a right to receive income or property in the future.

Correct Answer
verified

Exam 25: Transfer Taxes and Wealth Planning

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.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

A gift tax return does not need to be filed unless the taxpayer has made current gifts in excess of the applicable credit.

Correct AnswerverifiedShow Answer

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?

Correct AnswerverifiedShow Answer

A present interest is the right to currently enjoy property or receive income payments from property.

Correct AnswerverifiedShow Answer

Christian transferred $60,000 to an irrevocable trust for the benefit of his three daughters. The three daughters share income equally for five years and then the corpus of the trust is to be divided equally between them. What is the amount of the taxable gifts, if any, made by Christian?

Correct AnswerverifiedShow Answer

Which of the following is a true statement about the Federal gift tax return (Form 709) ?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

The gift-splitting election only applies to gifts made by taxpayers who reside in community property states.

Correct AnswerverifiedShow Answer

A serial gift strategy consists of arranging a trust to maximize the value of the applicable credit.

Correct AnswerverifiedShow Answer

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?

Correct Answerverified$150,000 and $115,000The life estate is...View AnswerShow Answer

Andrew and Brianna are married and live in Texas, a community property state. For their birthdays this year Andrew gave cash gifts of $20,000 to each of his two daughters, and Brianna gave $34,000 to her niece. What is the amount of Andrew's taxable gifts?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

The exemption equivalent was repealed in 1976.

Correct AnswerverifiedShow Answer

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?

Correct AnswerverifiedShow Answer

Which of the following is a true statement?

Correct AnswerverifiedShow Answer

A future interest is a right to receive income or property in the future.

Correct AnswerverifiedShow Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
verified
$150,000 and $115,000
The life estate is...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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