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A trust is a legal entity whose purpose is to hold and administer property for the benefit of beneficiaries.

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) $58,000.
C) $374,000.
D) $328,000.
E) None of the choices are correct.

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

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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?


A) $50,000.
B) $105,000.
C) $80,000.
D) zero-this property qualifies for the marital deduction.
E) None of the choices are correct.

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

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This year Nicholas earned $500,000 and used it to purchase land in joint tenancy with a right of survivorship with Nevaeh.Has Nicholas made a taxable gift to Nevaeh and,if so,in what amount?

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$236,000
In a common law state,Nicholas ...

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The gross estate always includes the value of half of any real property owned by a decedent and another person in joint tenancy with the right of survivorship.

A) True
B) False

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Which of the following is a true statement?


A) A fiduciary entity is a legal entity that takes possession of property for the benefit of a person.
B) An estate is a fiduciary that comes into existence upon a person's death to transfer the decedent's real and personal property.
C) A trust is also a fiduciary whose purpose is to hold and administer the corpus for other persons (beneficiaries) .
D) An estate exists only temporarily, but a trust may have a prolonged or even indefinite existence.
E) All of the choices are true.

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

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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 the choices are true.

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

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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.

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$136,000
The $150,000 transfer to the tr...

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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?

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$2 million
Abigail's gross estate would ...

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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 the choices are true.

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

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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?


A) Trevor must have a taxable estate of at least $4 million.
B) Trevor must have an adjusted gross estate of at least $4 million.
C) Trevor must have an estate tax base (cumulative taxable transfers) of at least $4 million.
D) Trevor must have a gross estate of at least $4 million.
E) None of the choices are necessarily true.

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

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Eric has $5 million of property that he wants to leave to his four children.He is considering making a current gift of the property (rather than leaving the property to pass through his will).Eric has made many prior taxable gifts and additional taxable transfers will be subject to the highest transfer tax rate.Determine how much estate tax Eric will save if he gifts the property now and survives at least three years,during which time the property appreciates to $5.5 million? Ignore the time value of money in your calculation.(Use Exhibit 14-1)

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$1,013,440
The top transfer tax rate is ...

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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 the choices are true.

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

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The theft of property included in the gross estate is only deductible in calculating the taxable estate if the loss exceeds 10 percent of the decedent's adjusted gross estate.

A) True
B) False

Correct Answer

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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 the choices are correct.

F) B) 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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An exemption equivalent is the amount of annual gifts that is automatically exempt from the gift tax.

A) True
B) False

Correct Answer

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At his death,Titus had a gross estate consisting of $6 million of property.Which of the following is a true statement about Titus' estate or estate tax?


A) Titus must have a probate estate of at least $6 million.
B) Titus must have an adjusted gross estate of at least $6 million.
C) Titus must have cumulative taxable transfers of at least $6 million.
D) Titus must have a tentative transfer tax calculated on at least $2 million of transfers.
E) None of the choices are necessarily true.

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

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The gross estate includes the value of half of real property owned by a decedent and spouse in joint tenancy with the right of survivorship.

A) True
B) False

Correct Answer

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