M7-Estate and Gift Transactions Flashcards
If a trust is revocable, then a completed gift has not taken place. Therefore, the assets of the trust are still included in the estate of the grantor. (true or false)
true
This is a disadvantage of a revocable trust
Although the trust is revocable, it is still a valid trust for legal purposes. Therefore, the assets are not subject to probate upon the death of the grantor.
The trust is revocable, therefore, the grantor still has the power to control the trust funds.
A married couple can elect to treat taxable gifts as made half by each spouse for gift tax purposes. Every donor receives a $14,000 per person, per year, exclusion from the gift tax. (true or false)
true
The maximum amount that can be transferred pursuant to a death tax-free is $____________?
$5,490,000
this is assuming the tax law in effect for 2017
There are four items that qualify for unlimited exclusion from gift tax and qualify to be excluded from being reported on a gift tax return:
1) Payments made directly to an educational institution for a donee’s tuition
2) Payments made directly to a health care provider for medical care
3) Charitable gifts
4) Marital transfers
Relationship of the donee to the donor is not of consequence.
There is no income tax on the value of inherited property. (true or false)
true
Income in respect of a decedent covers income earned before the taxpayer’s death but not collected until after death. (true or false)
true
Income in respect of a cash basis decedent collected after death is not included on the decedent’s final return, but is included in the estate tax return or the tax return of the heir.
Charitable bequest to qualifying organizations and funeral expenses of the decedent are both allowable deductions in determining the taxable estate. (true or false)
true
Expenses of administering and settling the estate are valid deductions from a decedent’s gross estate. (true or false)
true
The gross estate of the first spouse to die includes 50% of the value of all property owned by the couple, regardless of which spouse furnished the original consideration, as they are considered to have owned the property as joint tenants with right to survivor-ship. (true or false)
true
The due date for filing the gift tax return, assuming no extension was requested, is __________.
April 15th
An amount will not be treated as an excluded gift or bequest if the governing instrument provides that the specific sum is payable only from the “income” of the estate or trust. (true or false)
true
The generation-skipping transfer tax is imposed in addition to any gift or estate tax that may result from a transfer. (true or false)
true
The generation-skipping transfer tax is imposed on transfers of future interest who are two generations or more below the donor’s generation.
The applicable credit and the amount of gift taxes payable on prior gifts made (after 1976) reduce the amount of calculated tentative estate tax to arrive at the amount of estate tax payable with the estate tax return (Form 706). (true or false)
true
Note: Only gifts made after 1976 are added back to the gross estate to determine the taxable estate. The gift tax payable on these gifts are a subtraction to arrive at the Form 706 line item number 10 called gross estate tax.
Note: the applicable credit cannot make estate tax less than zero.
The alternate valuation date is the earlier of the date of distribution or _____months after the date of death.
6 months
Imputed interest on an interest-free loan is subject to gift tax for each year the loan is outstanding. (true or false)
true
