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A unified credit is subtracted in calculating both the gift tax and the estate tax. Why doesn't this calculation have the effect of increasing the total unified credit amount?


A) The tentative estate tax is reduced by only taxes payable on adjusted taxable gifts rather than gross gift taxes.
B) The unified credit only offsets the exemption equivalent.
C) The unified credit cannot be used to offset gift taxes on adjusted taxable gifts.
D) The unified credit varies in amount from year to year.
E) None of these

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

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Both spouses must consent to any gift-splitting election.

A) True
B) False

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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 these

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

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This year Carlos and Hailey purchased realty for $480,000 and took title as equal tenants in common. However, Hailey was able to provide only $200,000 of the purchase price and Carlos paid the remaining $280,000. Has Carlos made a taxable gift to Hailey, and if so, in what amount?

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$26,000
Explanation: Carlos ha...

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Which of the following is a completed taxable gift?


A) $20,000 in cash contributed to the committee to reelect Senator BlowHard.
B) $15,000 in cash given to Valley Hospital for the care of a neighbor who was in an auto accident.
C) $18,000 in cash given to a needy student to pay for college tuition.
D) $55,000 in cash transferred to a former spouse under a written property settlement shortly after a divorce.
E) None of these

F) All of the above
G) B) and D)

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Which of the following is a true statement?


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 unified 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 these

F) D) and E)
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

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

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No deductions are allowed when calculating the taxable estate.

A) True
B) False

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Ethan owned a vacation home at the time of his death. Which of the following is a true statement if Ethan was married to Emma and resided in a common law state at the time of his death?


A) Ethan can claim a marital deduction for the vacation home if he bequeaths it to Emma.
B) Ethan cannot claim a marital deduction if he bequeaths a life estate in the vacation home to Emma.
C) Ethan can claim a marital deduction for half the value of the vacation home if it was owned with Emma in joint tenancy with the right of survivorship.
D) Ethan can claim a charitable deduction if he bequeaths it to a qualified charity.
E) All of these are true

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

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The calculation of the value of a life estate in a trust generally does not depend upon which of the following factors?


A) the age of the life tenant.
B) the Section 7520 interest rate.
C) the value of the property at the time of the transfer.
D) the manner in which the trust corpus is invested.
E) All of these

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

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Which of the following is a true statement?


A) A serial gift strategy utilizes intervivos gifts to multiple donees over multiple years to maximize the annual exclusion.
B) A serial gift strategy works well even if the gifts don't qualify as present interests.
C) A bypass trust avoids all estate taxes on the estate of the first spouse to die.
D) The income tax savings from holding appreciated property until death is always outweighed by the additional estate tax imposed on the property.
E) None of these

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

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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?


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 has the option of deducting a loss of $120,000 on the estate tax return or on the estate's income tax return.
D) No casualty loss deduction is available for calculating the estate tax.
E) None of these

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

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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 C)
G) A) and B)

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The tax on cumulative taxable gifts is reduced by the unified credit regardless of whether any unified credit was used in prior years.

A) True
B) False

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At her death Emily owned real estate worth $2.5 million and other property worth $1 million. Property taxes of $200,000 were accrued on the real estate at the time of Emily's death. Which of the following is a true statement?


A) Emily's gross estate is $3.3 million.
B) Emily's taxable estate is $3.5 million.
C) Emily's adjusted gross estate is $3.3 million.
D) Emily's estate tax base is $3.5 million.
E) None of these

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

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Only complete gifts are subject to the Federal gift tax.

A) True
B) False

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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?

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blured image $4 million
Explanation: Sophia's estate...

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

A) True
B) False

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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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At her death Tricia owned a life insurance policy on her life that paid her daughter $500,000 upon her death. The policy was only valued at $25,000 prior to Tricia's death. What amount, if any, is included in Tricia's gross estate?


A) $500,000
B) $25,000
C) $25,000 if Tricia transferred ownership of the policy within three years of her date of death.
D) zero - life insurance proceeds due to the death of the decedent are not included in the decedent's gross estate.
E) zero if Tricia's daughter refused to accept the proceeds.

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

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