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Exam 14: Transfer Taxes and Wealth Planning

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Question 21

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Both spouses must consent to any gift-splitting election.

A) True
B) False

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Question 22

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

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Question 23

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A bypass provision in a will requires a decedent to have a taxable estate in order to use an applicable credit to reduce total estate taxes on a married couple.

A gratuitous transfer of property made during the lifetime of the donor is called:

The gift tax is imposed on intervivos (lifetime) transfers.

The debts of the decedent at the time of death are deducted in calculating the taxable estate.

At her death Serena owned real estate worth $210,000 with her spouse in joint tenancy with the right of survivorship. Serena contributed $50,000 to the original cost of the property and her spouse contributed the remaining $100,000. What amount, if any, is included in Serena's gross estate?

Alexis transferred $400,000 to a trust with directions to pay income to her spouse, William, for his life. After William's death the corpus of the trust will pass to William's son. If the life estate is valued at $72,000, what is the total amount of the taxable gifts?

The exemption equivalent was repealed in 1976.

Which of the following statements is (are) True?

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

Sophia is single and owns the following property: Sophia owns the real property in joint tenancy with Daniel. They purchased the property several years ago for $1 million. Sophia was only able to provide $200,000 of the purchase price. If Sophia dies, what is the amount of her gross estate?

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?

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

At his death Trevor had a probate estate consisting of $4 million of property. Which of the following is a True statement about Trevor's estate or estate tax?

This year Evelyn created an irrevocable trust to provide for Ed, her 32-year-old nephew, and Ed's family. Evelyn transferred $150,000 to the trust and named a bank as the trustee. The trust was directed to pay income to Ed until he reaches age 35 (three years from now), and at that time the trust is to be terminated and the corpus is to be distributed to Ed's two children (or their estates). Determine the amount, if any, of the taxable gift. The relevant interest rate is 6 percent.

The executor of Isabella's estate incurred administration expenses of $32,000 and paid $5,000 in funeral expenses. The executor charged the estate for $24,000 in fees. What is the maximum amount Isabella's estate can deduct in computing the adjusted gross estate?

Angel and Abigail are married and live in a common law state. Angel and Abigail own a parcel of realty as joint tenants with the right of survivorship. In addition, Abigail owns another parcel of realty in her name alone. If Abigail should die when the jointly-owned realty is worth $1 million and her own parcel of realty is worth $1.5 million, what is the total value of realty that would be included in Abigail's gross estate?

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?

This year Alex's friend, Kimberly, was disabled. Alex paid $30,000 to Kimberly's doctor for medical expenses. In addition, Alex also paid $25,000 to Kimberly directly so that her son could afford tuition at State University this year. Has Alex made taxable gifts, and if so, in what amounts?