Question 1

In the current year,Cesar,who is single,gives $26,000 to each of his 20 nieces and nephews for a total property transfer of $520,000.Cesar's taxable gifts total

Accepted Answer

D)
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Question 2

Mia makes a taxable gift when she makes her mother a joint owner on Mia's bank account.Mia has $25,000 in the account.

Accepted Answer

False

Question 3

A qualified disclaimer must be made within nine months after (a)the day the property is transferred,or (b)the day the person receiving the property becomes age 21,whichever is later.

Accepted Answer

A qualified disclaimer must be made within nine months after the day the property is transferred, or the day the person receiving the property becomes age 21, whichever is later.

Question 4

The gift tax is a wealth transfer tax that applies to transfers during a person's lifetime and transfers at death.

Accepted Answer

The gift tax applies only to transfers made during a person's lifetime. The estate tax applies to transfers at death.

Question 5

Jennifer and Terry,a married couple,live in Illinois;which is a common law state.In the current year,Terry gives his sister $200,000 cash.Jennifer and Terry agree to gift splitting.Neither Jennifer nor Terry has made any taxable gifts in prior years.What are Jennifer and Terry's taxable gifts?

Accepted Answer

The answer of Jennifer and Terry,a married couple,live in Illinois;which...

Question 6

Molly sells her car,valued at $30,000,to her nephew Todd for $18,000.Molly has made a taxable gift.

Accepted Answer

Molly sold her car for less than its value, which is considered a gift. Any gift over $15,000 per year is subject to gift tax, making it a taxable gift.

Question 7

In October 1976,Marian made a large taxable gift.It was her first gift.Marian used her $30,000 specific exemption to reduce her taxable gift amount.What impact does this gift have on her unified credit and death tax base?

Accepted Answer

The answer of In October 1976,Marian made a large taxable...

Question 8

Barbara sells a house with an FMV of $170,000 to her daughter for $120,000.From this transaction,Barbara is deemed to have made a gift (before the annual exclusion)of

Accepted Answer

The FMV of the house is $170,000 and it was sold for $120,000, which means Barbara made a gift of $50,000 to her daughter. This gift is before any annual exclusion, so the correct answer is A.

Question 9

Discuss the ways in which the estate and gift tax system is a unified system.

Accepted Answer

The answer of Discuss the ways in which the estate...

Question 10

Mike transfers securities to an irrevocable trust and gives Rachel the power to determine who will receive the trust's income and assets.Rachel,her estate,and her creditors cannot be beneficiaries or receive the trust assets.Rachel has a general power of appointment.

Accepted Answer

Rachel does not have a general power of appointment because she, her estate, and her creditors cannot benefit from the trust's assets. A general power of appointment allows the holder to appoint the property to themselves, their estate, their creditors, or any other person.

Question 11

In 1998,Delores made taxable gifts to her son of property with an FMV of $200,000.In the current year when Delores dies,the property is worth $800,000.The amount included in Delores's estate tax base because of the 1998 gift is

Accepted Answer

The taxable gifts made by Delores during her lifetime are added to determine her estate tax base. Therefore, the amount included in Delores's estate tax base because of the 1998 gift is the full FMV of the property at the time of the gift, which is $200,000. The current FMV of the property at the time of Delores's death is not relevant for determining the estate tax base for this gift.

Question 12

Identify which of the following statements is true.

Accepted Answer

Option C is the correct statement. The gift tax is a part of the unified transfer tax system, and it applies to transfers during a person's lifetime. However, transfers at death are subject to estate tax. Under the unified transfer tax system, all taxable gifts made after 1976 are included in the donor's death tax base. Therefore, option A and B are false.

Question 13

In the current year,Bonnie,who is single,sells stock valued at $60,000 to Linda for $15,000.Later that year,Bonnie gives Linda $25,000 in cash.Bonnie's taxable gifts from these transfers total

Accepted Answer

C)
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Question 14

A net gift occurs when a donor makes a gift subject to the agreement that the recipient agrees to pay the gift tax.

Accepted Answer

In a net gift, the donor specifies that the recipient will be responsible for paying any gift tax due on the transfer.

Question 15

The annual exclusion permits donors to make gifts of $14,000 each to multiple donees.

Accepted Answer

The annual exclusion for 2021 is $15,000, and it allows donors to make gifts up to this amount to as many donees as they wish without triggering gift tax or using any of their lifetime gift tax exemption.

Question 16

The changing of a life insurance policy beneficiary from a spouse to an adult daughter constitutes a gift for transfer tax purposes.

Accepted Answer

Changing a beneficiary on a life insurance policy does not constitute a gift for transfer tax purposes because the change in beneficiary does not transfer any present interest or economic benefit to the new beneficiary until the death of the insured.

Question 17

Identify which of the following statements is true.

Accepted Answer

Option B is true. Underestimating a property's fair market value and selling it for a price below its fair market value can result in a gift tax liability. The other options are false. A taxable gift occurs when property is given away without receiving anything of equal value in return. The exemption for payments made for medical care does not require that the payment be made for a relative.

Question 18

Phil transfers $50,000 to a revocable trust benefiting his son,Josh.The transfer is a taxable gift.

Accepted Answer

Since Phil can revoke the trust and take back the assets, for tax purposes, he has not made a completed gift. Therefore, it is not considered a taxable gift.

Question 19

Identify which of the following statements is true.

Accepted Answer

The answer of Identify which of the following statements is...

Question 20

In November 1976,Grant uses $30,000 of the specific exemption available at that time.The unified credit available to Grant for post-1976 transfers is reduced by

Accepted Answer

The unified credit for post-1976 transfers was $192,800 in 2020. The specific exemption in 1976 was $30,000. Therefore, the reduction in the unified credit available to Grant would be equal to the amount of the specific exemption used ($30,000). Therefore, the unified credit available to Grant would be reduced by $30,000, leaving $162,800.

Quiz 12: The Gift Tax

In the current year,Cesar,who is single,gives $26,000 to each of his 20 nieces and nephews for a total property transfer of $520,000.Cesar's taxable gifts total

Mia makes a taxable gift when she makes her mother a joint owner on Mia's bank account.Mia has $25,000 in the account.

A qualified disclaimer must be made within nine months after (a)the day the property is transferred,or (b)the day the person receiving the property becomes age 21,whichever is later.

The gift tax is a wealth transfer tax that applies to transfers during a person's lifetime and transfers at death.

Jennifer and Terry,a married couple,live in Illinois;which is a common law state.In the current year,Terry gives his sister $200,000 cash.Jennifer and Terry agree to gift splitting.Neither Jennifer nor Terry has made any taxable gifts in prior years.What are Jennifer and Terry's taxable gifts?

Molly sells her car,valued at $30,000,to her nephew Todd for $18,000.Molly has made a taxable gift.

In October 1976,Marian made a large taxable gift.It was her first gift.Marian used her $30,000 specific exemption to reduce her taxable gift amount.What impact does this gift have on her unified credit and death tax base?

Barbara sells a house with an FMV of $170,000 to her daughter for $120,000.From this transaction,Barbara is deemed to have made a gift (before the annual exclusion) of

Discuss the ways in which the estate and gift tax system is a unified system.

Mike transfers securities to an irrevocable trust and gives Rachel the power to determine who will receive the trust's income and assets.Rachel,her estate,and her creditors cannot be beneficiaries or receive the trust assets.Rachel has a general power of appointment.

In 1998,Delores made taxable gifts to her son of property with an FMV of $200,000.In the current year when Delores dies,the property is worth $800,000.The amount included in Delores's estate tax base because of the 1998 gift is

Identify which of the following statements is true.

In the current year,Bonnie,who is single,sells stock valued at $60,000 to Linda for $15,000.Later that year,Bonnie gives Linda $25,000 in cash.Bonnie's taxable gifts from these transfers total

A net gift occurs when a donor makes a gift subject to the agreement that the recipient agrees to pay the gift tax.

The annual exclusion permits donors to make gifts of $14,000 each to multiple donees.

The changing of a life insurance policy beneficiary from a spouse to an adult daughter constitutes a gift for transfer tax purposes.

Identify which of the following statements is true.

Phil transfers $50,000 to a revocable trust benefiting his son,Josh.The transfer is a taxable gift.

Identify which of the following statements is true.

In November 1976,Grant uses $30,000 of the specific exemption available at that time.The unified credit available to Grant for post-1976 transfers is reduced by