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Exam 14: Transfer Taxes and Wealth Planning

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Question 1

True/False

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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

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Question 2

Multiple Choice

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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) All of the above

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Question 3

Multiple Choice

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

The marital and charitable deductions are common to both the estate tax and the gift tax formulas.

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

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

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

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?

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

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?

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.

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?

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

The Federal transfer taxes are calculated using cumulative lifetime transfers.

Which of the following is a true statement?

Ricardo transferred $1,000,000 of cash to State University for a new sports complex.Calculate the amount of the taxable gift.

The exemption equivalent was repealed in 1976.

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

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

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?