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When a gift-splitting election is made, gifts made by either spouse during the year will be treated as if each spouse made one-half of the transfer.

A) True
B) False

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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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The remainder value is $940,000 and the ...

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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 directly to Valley Hospital for the care of a neighbor who was in an auto accident.
C) $18,000 in cash given directly 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 the choices is a completed taxable gift.

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

Correct Answer

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The annual exclusion applies to cumulative gifts made to each donee over the course of the year.

A) True
B) False

Correct Answer

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Last year Brandon opened a savings account with a deposit of $45,000. The account was in the name of Brandon and Melanie, joint tenancy with the right of survivorship. Melanie did not contribute to the account, but this year she withdrew $18,000. Has Brandon made a taxable gift to Melanie, and if so, in what amount?

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$3,000
No gift was made at the time of t...

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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

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The gross estate will not include the value of clothes and other personal items owned by the decedent at the time of death.

A) True
B) False

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The probate estate consists of all property owned by the decedent that is excluded from the gross estate.

A) True
B) False

Correct Answer

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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 the choices are correct.

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

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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 D)
G) A) and B)

Correct Answer

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Gabriel had a taxable estate of $16 million when he died in 2018. Calculate the amount of estate tax due (if any) if Gabriel made prior taxable gifts in 2005 totaling $1 million at which time he claimed an applicable credit of $1 million and paid no tax. Gabriel was unmarried at his death. (Use Exhibit 25-1)

Correct Answer

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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

Correct Answer

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

Correct Answer

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Including adjusted taxable gifts in the taxable estate causes these gifts to be taxed twice, once under the gift tax and again under the estate tax.

A) True
B) False

Correct Answer

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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 the choices are correct.

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

Correct Answer

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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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$2,500 and $7,000
Since the gifts are fr...

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Christian transferred $60,000 to an irrevocable trust for the benefit of his three daughters. The three daughters share income equally for five years and then the corpus of the trust is to be divided equally between them. What is the amount of the taxable gifts, if any, made by Christian?


A) $60,000.
B) $46,000.
C) $34,000.
D) $18,000.
E) None of the choices are correct - the amount of the taxable gifts cannot be ascertained without valuing each income interest.

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

Correct Answer

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The applicable credit is designed to:


A) apply only to taxable transfers included in the gross estate.
B) prevent taxation of cumulative transfers that do not exceed a certain minimum amount.
C) apply to amounts not already eliminated by the exemption equivalent.
D) exclude up to $15,000 per individual per year on any individual transfer.
E) None of the choices are correct.

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

Correct Answer

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Last year Diego transferred a life insurance policy worth $75,000 to an irrevocable trust with directions to distribute the corpus of the trust to his grandson, Juan, upon his graduation from college, or to Juan's estate upon his death. Diego paid $5,000 of gift tax on the transfer of the policy. Early this year, Diego died and the insurance company paid $600,000 to the trust. What amount, if any, is included in Diego's gross estate?

Correct Answer

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$605,000
Diego died within thr...

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