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Adjusted taxable gifts are added to the taxable estate to accomplish which of the following objectives?


A) Prevent double taxation of previously taxed gifts.
B) Increase the marginal tax rate on previously taxed gifts.
C) Increase the marginal tax rate on the taxable estate.
D) Remove intervivos transfers from cumulative taxable transfers.
E) None of these.

F) All of the above
G) A) and C)

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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 $5,000 in cash. What is the amount of the taxable gifts, if any, made by Samantha this year?


A) $3,000
B) $32,000
C) $45,000
D) zero - none of the gifts exceed the annual exclusion.
E) None of these.

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

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Aiden transferred $2 million to an irrevocable trust with income to Valeria for her life and the remainder to Jocelyn (or her estate). Calculate the value of the remainder and the life estate if Valeria's age and the prevailing interest rate result in a Table S discount factor for the remainder of 0.47.

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$940,000 and $1,060,000, respe...

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Which of the following statements is(are) true?


A) The same transfer tax rate schedule is used to calculate both the estate tax and the gift tax.
B) The transfer tax rate schedule is regressive in nature.
C) The amount of the unified credit varies according to whether the taxable transfer is intervivos or testamentary.
D) The exemption equivalent automatically offsets transfers in calculating cumulative taxable transfers.
E) All of these are true.

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

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


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) A) and B)
G) D) and E)

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

A) True
B) False

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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?


A) $386,000
B) $59,000
C) $374,000
D) $324,000
E) None of these.

F) C) and D)
G) D) and E)

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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 $30,000 to her niece. What is the amount of Andrew's taxable gifts?


A) $1,000
B) $14,000
C) $28,000
D) zero if Andrew and Brianna elect to split gifts.
E) None of these.

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

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


A) A unified credit of up to $1 million 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 these are true.

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

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

A) True
B) False

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

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 these is true.

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

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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 these.

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

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The exemption equivalent was repealed in 1976.

A) True
B) False

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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?


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 these

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

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

A) True
B) False

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Tracey is unmarried and owns $7 million in stock and bonds. What is the result if Tracey dies this year and leaves all of her property to a qualified charity?


A) Tracey's gross estate will be zero.
B) Tracey's estate tax basis will be zero.
C) Tracey's taxable estate will be zero.
D) Tracey's estate will have a tentative estate tax of zero.
E) None of these.

F) A) and B)
G) None of the above

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


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 these is true.

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

Correct Answer

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

A) True
B) False

Correct Answer

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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.

Correct Answer

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Zero.
Explanation: The gift qualifies fo...

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