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A present interest is the right to currently enjoy property or receive income payments from property.

A) True
B) False

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The gross estate may contain property transfers that are not included in the probate estate.

A) True
B) False

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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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For the holidays, Samuel gave a necklace worth $35,000 to Jennifer and jewelry worth $44,000 to Savannah. Samuel is married to Wendy and they live in a community property state. Has Samuel made any taxable gifts and, if so, in what amounts?

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Property is included in the gross estate at the value a willing buyer would pay a willing seller, neither being under any compulsion to buy or to sell, and both having reasonable knowledge of the relevant facts.

A) True
B) False

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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 is true.

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

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James and Jasmine live in a community property state. This year they transferred $800,000 of property to an irrevocable trust that provides their son, Aaron, a life estate and their daughter, Lauren, the remainder. At the time of the gift, the Table S value for Aaron was .18031. What is the amount, if any, of the taxable gifts?

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James and Jasmine ea...

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This year Brent purchased season baseball tickets in the exclusive sky club. The price of the tickets was $60,000, and Brent divided the tickets equally with his two brothers. Has Brent made a taxable gift and, if so, in what amount?


A) Brent made a taxable gift of $46,000.
B) Brent made two taxable gifts of $17,000 each.
C) Brent transferred the tickets for love and affection so no gift tax is imposed.
D) Brent made two taxable gifts of $6,000.
E) None of these.

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

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

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

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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 is a completed taxable gift.

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

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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 is true.

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

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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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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) C) and D)

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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 inter vivos transfers from cumulative taxable transfers.
E) None of these.

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

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This year Anthony transferred $250,000 of bonds to a trust with directions to the trustee to pay income to his son for the next 20 years. After 20 years the trust corpus would revert to Anthony. Which of the following is a true statement?


A) Anthony has made a $250,000 gift.
B) Anthony has made a $237,000 taxable gift.
C) Anthony has not yet made a completed gift.
D) Anthony has made a completed gift of the income interest only.
E) None of these is true.

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

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The testamentary transfer of property to a qualified charity is deductible in calculating the taxable estate without any ceiling limitation.

A) True
B) False

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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?

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$151,000 a...

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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.

Correct Answer

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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) All of the above
G) C) and D)

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