Question 1

The tax on cumulative taxable gifts is reduced by the applicable credit regardless of whether any applicable credit was used in prior years.

Accepted Answer

A) True 
 B)False

Question 2

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 among them. What is the amount of the taxable gifts, if any, made by Christian?

Accepted Answer

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 B)
G) C) and D)

Question 3

This year Nathan transferred $7 million to an irrevocable trust established for the benefit of his nephew. The trustee is directed to accumulate income for the next five years before distributing the trust corpus to Nathan's nephew. In past years Nathan has made taxable gifts of $6 million and used an applicable credit on an exemption equivalent of $5 million. What amount of gift tax, if any, must Nathan remit?

Accepted Answer

A)  $168,000.
B)  $240,000.
C)  $345,800.
D)  zero-there is a $11.58 million exemption equivalent.
E)  None of the choices are correct. The amount of tax cannot be estimated without the use of a tax rate schedule.F) B) and E)
G) B) and D)

Question 4

Which of the following statements is (are) true?

Accepted Answer

A)  The same transfer tax rate schedule is used to calculate both the estate tax and the gift tax.
B)  The transfer tax rate schedule is regressive in nature.
C)  The amount of the applicable credit varies according to whether the taxable transfer is inter vivos or testamentary.
D)  The exemption equivalent automatically offsets transfers in calculating cumulative taxable transfers.
E)  All of the choices are true.F) A) and E)
G) D) and E)

Question 5

Adjusted taxable gifts are included when calculating the taxable estate but are not subject to double taxation because a tax credit is provided for taxes payable on adjusted taxable gifts.

Accepted Answer

A) True 
 B)False

Exam 25: Transfer Taxes and Wealth Planning

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 among them. What is the amount of the taxable gifts, if any, made by Christian?

Correct Answer
verified

The tax on cumulative taxable gifts is reduced by the applicable credit regardless of whether any applicable credit was used in prior years.

Correct Answer
verified

Adjusted taxable gifts are included when calculating the taxable estate but are not subject to double taxation because a tax credit is provided for taxes payable on adjusted taxable gifts.

Correct Answer
verified

Which of the following statements is (are) true?

Correct Answer
verified

Correct Answer
verified

Exam 25: Transfer Taxes and Wealth Planning

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 among them. What is the amount of the taxable gifts, if any, made by Christian?

Correct AnswerverifiedShow Answer

The tax on cumulative taxable gifts is reduced by the applicable credit regardless of whether any applicable credit was used in prior years.

Correct AnswerverifiedShow Answer

Adjusted taxable gifts are included when calculating the taxable estate but are not subject to double taxation because a tax credit is provided for taxes payable on adjusted taxable gifts.

Correct AnswerverifiedShow Answer

Which of the following statements is (are) true?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified