Deck 19

Question 1

The annual gift tax exclusion per donee for gifts of a present interest is:

Answer 1

$14,000

Question 2

The maximum amount that can be transferred pursuant to a death tax-free is:

Answer 2

$5,430,000

Question 3

What is the exemption amount for simple trusts?

Answer 3

$300; allowed in the calculation of taxable income

Question 4

Income distribution deduction is the lessor of:

Answer 4

Distributable net income (DNI) or the actual amount distributed to the beneficiary

Question 5

Definition of a gift:

Answer 5

Every transfer of money or property, whether real or personal, tangible or intangible, for less than adequate or full consideration

Question 6

Four items that qualify for unlimited exclusion from gift tax

Answer 6

1) payments made directly to an educational institution for a spouse’s tuition; 2) payments made directly to a health care provider for medical care; 3) charitable gifts; and 4) Marital transfers

Question 7

A fiduciary must file a return on Form 1041 if the estate has gross income of:

Answer 7

$600 or more for the tax year

Question 8

The standard deduction for a trust or an estate in the fiduciary income tax return is:

Answer 8

$0

Question 9

Which fiduciary entities are required to use the calendar year as their taxable period for income tax purposes? (Estates and/or trusts)

Answer 9

Trusts must adopt a calendar year; Estates may choose the same accounting period as the decedent, or it may choose a calendar year or any fiscal year it wishes

Question 10

Within how many months after the date of a decedent’s death is the federal estate tax return (Form 706) due?

Answer 10

9 months

Question 11

Generation-skipping transfer tax is imposed:

Answer 11

As a separate tax in addition to the gift and estate taxes

Question 12

General rule to deduct administration expenses:

Answer 12

A statement must be filed with the income tax return stating that those deductions have not been taken on the decedent’s estate tax return.

Question 13

Alternate valuation date (estate tax) is the earlier of:

Answer 13

Date of distribution or 6 months after the date of death

Question 14

When the creator is treated as the owner of the trust, it is referred to as what kind of trust?

Answer 14

Grantor trust

Question 15

Martial deduction definition:

Answer 15

All items in the decedent’s estate and transferred to the spouse

Question 16

Distributable Net Income (DNI) =

Answer 16

Estate income - estate disbursements (includes capital gains); anything attributable to corpus not included

Question 17

Form 1041

Answer 17

Annual Income Tax Return for Trusts and Estates

Question 18

Tax year for estates is

Answer 18

Calendar year or fiscal year; “you can die anytime”

Question 19

Tax year for trusts is:

Answer 19

Calendar year only; 12/31 is year-end

Question 20

Nondiscretionary Expenses (bills you have to pay) include:

Answer 20

Medical expenses and administrative expenses

Question 21

Discretionary Expenses includes:

Answer 21

Unlimited charitable deduction and unlimited marital deduction