Question 1

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?

Accepted Answer

The answer of James and Jasmine live in a community...

Question 2

Caleb transferred $115,000 to an irrevocable trust for Avery. The trustee has the discretion to distribute income or corpus for Avery's benefit but is required to distribute all assets to Avery (or his estate) not later than Avery's 21st birthday. What is the amount, if any, of the taxable gift?

Accepted Answer

The answer of Caleb transferred $115,000 to an irrevocable trust...

Question 3

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?

Accepted Answer

The answer of Last year Diego transferred a life insurance...

Question 4

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?

Accepted Answer

The answer of This year Carlos and Hailey purchased realty...

Question 5

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?

Accepted Answer

The answer of This year Nicholas earned $500,000 and used...

Question 6

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

Accepted Answer

The answer of Ricardo transferred $1,000,000 of cash to State...

Question 7

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.

Accepted Answer

The answer of Aiden transferred $2 million to an irrevocable...

Question 8

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?

Accepted Answer

The answer of For the holidays, Samuel gave a necklace...

Question 9

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.

Accepted Answer

The answer of This year Maria transferred $600,000 to an...

Question 10

Ava transferred $1.5 million of real estate into an irrevocable trust for her son, Luis. The trustee was directed to retain income until Luis' 21st birthday and then pay him the corpus of the trust. Ava retained the power to require the trustee to pay income to Luis at any time, and the right to the assets if Luis predeceased her. What amount of the trust, if any, will be included in Ava's estate if she died shortly after making the transfer?

Accepted Answer

The answer of Ava transferred $1.5 million of real estate...

Question 11

Grace transferred $800,000 into trust with the income to be paid annually to her spouse, Isaiah, for life and the remainder to Taylor. Calculate the amount of the taxable gifts from the transfers.

Accepted Answer

The answer of Grace transferred $800,000 into trust with the...

Question 12

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?

Accepted Answer

The answer of Last year Brandon opened a savings account...

Question 13

Ashley owns a whole-life insurance policy worth $25,000 that directs the insurance company to pay the beneficiary $500,000 on her death. Ashley pays the annual policy premiums and has the power to designate the beneficiary of the policy. What value of the policy, if any, would be included in Ashley's estate upon her death?

Accepted Answer

The answer of Ashley owns a whole-life insurance policy worth...

Question 14

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.

Accepted Answer

The answer of This year Evelyn created an irrevocable trust...

Question 15

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?

Accepted Answer

The answer of Angel and Abigail are married and live...

Question 16

Sophia is single and owns the following property: $\begin{array}{lr}
{\text { Description }} & {\text { Value }} \
\text { Real estate property } & \$ 4,500,000 \
\text { Cash, stock, and bonds } & 2,800,000 \
\text { Personal property } & 300,000
\end{array}$ 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?

Accepted Answer

The answer of Sophia is single and owns the following...

Question 17

Joshua and David purchased real property for $500,000 as equal tenants in common. Although they are listed as equal co-owners, Joshua was only able to provide $200,000 of the purchase price. David treated the additional $100,000 of his contribution to the purchase price as a gift to Joshua. If the property is worth $2.5 million at Joshua's death, what amount would be included in Joshua's estate?

Accepted Answer

The answer of Joshua and David purchased real property for...

Question 18

Adrian owns two parcels of real estate. Parcel #1 is worth $400,000 and Parcel #2 is worth $660,000. Adrian plans to bequeath Parcel #1 directly to his spouse Sofia and leave her a life estate in Parcel #2. What amounts will be included in Adrian's taxable estate for these two parcels?

Accepted Answer

The answer of Adrian owns two parcels of real estate....

Question 19

At his death in 2014 Nathan owned the following property: $\begin{array}{c}
\begin{array}{lll}
\frac{\text { Description}}\\
\text{Real estate}\
\text{Cash, stock, and bonds}\
\text{Personal property}\
\end{array}
\begin{array}{lll}
&
\end{array}
\begin{array}{lll}
\frac{\text { Value }}\\
{\$ 5,000,000} \
10,500,000 \
200,000\
\end{array}
\end{array}$ The real estate is subject to a $1,700,000 mortgage and Nathan made taxable gifts in 2009 totaling $2 million at which time he offset the gift tax with a unified credit (exemption equivalent of $2 million). Nathan has never been married. What is the amount of his estate tax due?

Accepted Answer

The answer of At his death in 2014 Nathan owned...

Question 20

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?

Accepted Answer

The answer of Ryan placed $280,000 in trust with income...

Quiz 25: Transfer Taxes and Wealth Planning of the Cfa Institute