Question 1

The theft of property included in the gross estate is only deductible in calculating the taxable estate if the loss exceeds 10 percent of the decedent's adjusted gross estate.

Accepted Answer

A) True 
 B)False

Question 2

Proceeds of life insurance paid due to the death of the decedent are included in the decedent's gross estate if the decedent had the right to designate the beneficiary of the policy.

Accepted Answer

A) True 
 B)False

Question 3

Matthew and Addison are married and live in Michigan, a common-law state. For the holidays Addison gave cash gifts of $30,000 to each of her two sons, and Matthew gave $40,000 to his daughter. What is the amount of Addison's taxable gifts if Matthew and Addison opt to gift split?

Accepted Answer

A)   $58,000
B)   $8,000
C)   $16,000
D)   $4,000
E)   None of theseF) A) and B)
G) C) and D)

Question 4

The debts of the decedent at the time of death are deducted in calculating the taxable estate.

Accepted Answer

A) True 
 B)False

Question 5

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 unified 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 these are true.F) B) and C)
G) A) and E)

Question 6

The annual exclusion eliminates relatively small transfers of present interests in property.

Accepted Answer

A) True 
 B)False  True

Question 7

The income tax benefit derived from a step-up in tax basis should be measured against the estate tax cost of including the property in the decedent's gross estate.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following is a true statement?

Accepted Answer

A)   Executor's fees paid by an estate are deductible in computing the gross estate.
B)   Funeral expenses for the decedent paid by an estate are deductible in computing the adjusted gross estate.
C)   An executor can choose to deduct the decedent's funeral expenses on either the estate tax return or the estate's income tax return.
D)   An executor can only deduct the costs of administering the decedent's estate on the estate's income tax return.
E)   None of these is true.F) A) and D)
G) A) and E)

Question 9

The gross estate will not include the value of clothes and other personal items owned by the decedent at the time of death.

Accepted Answer

A) True 
 B)False

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

Proceeds of life insurance paid to the decedent's estate due to the death of the decedent are included in the decedent's gross estate even if the decedent had no ownership rights in the policy at the time of death.

Accepted Answer

A) True 
 B)False

Question 12

At his death Trevor had a probate estate consisting of $4 million of property. Which of the following is a true statement about Trevor's estate or estate tax?

Accepted Answer

A)   Trevor must have a taxable estate of at least $4 million.
B)   Trevor must have an adjusted gross estate of at least $4 million.
C)   Trevor must have an estate tax base (cumulative taxable transfers)  of at least $4 million.
D)   Trevor must have a gross estate of at least $4 million.
E)   None of these is necessarily true.F) B) and E)
G) C) and E)

Question 13

Which of the following transfers is a completed gift?

Accepted Answer

A)   Payment of child support by a former spouse.
B)   Transfer of property to a revocable trust.
C)   Transfer of cash to a bank account held in joint tenancy with the right of survivorship.
D)   Income paid to the beneficiary of a revocable trust.
E)   None of these is a completed gift.F) None of the above
G) A) and B)

Question 14

Eric has $5 million of property that he wants to leave to his four children. He is considering making a current gift of the property (rather than leaving the property to pass through his will). Eric has made many prior taxable gifts and additional taxable transfers will be subject to the highest transfer tax rate. Determine how much estate tax Eric will save if he gifts the property now and survives at least three years, during which time the property appreciates to $5.5 million. Ignore the time value of money in your calculation.

Accepted Answer

The answer of Eric has $5 million of property that...

Question 15

Which of the following transactions would not utilize the "Section 7520 rate" to calculate the value of the transfer?

Accepted Answer

A)   A transfer of property with a retained life estate.
B)   A transfer of property to a spouse.
C)   A transfer of a remainder interest in real property.
D)   A transfer of a 10-year term certain in real property.
E)   None of these utilizes the "Section 7520 rate" in the calculation of the value of the property.F) A) and D)
G) A) and C)

Question 16

The estate and gift taxes share several common features. Which of the following characteristics are common to both the estate and gift taxes?

Accepted Answer

A)   A unified credit and a marital deduction.
B)   A charitable deduction and an annual exclusion.
C)   A gift-splitting election and a deduction for income taxes paid by the fiduciary.
D)   A charitable deduction and the unused spousal exemption equivalent.
E)   All of these are characteristics common to both the gift and the estate tax.F) C) and E)
G) A) and C)

Question 17

A transfer of cash to a bank account held in joint tenancy with the right of survivorship is not a completed gift.

Accepted Answer

A) True 
 B)False  True

Question 18

Natalie transferred $500,000 of bonds to a revocable trust with directions to the trustee to pay income to her aunt for five years after which the corpus is to be distributed to Natalie's niece. At year end, the trustee paid $15,000 of income to the aunt. Which of the following is a true statement?

Accepted Answer

A)   Natalie has made a completed gift of $500,000.
B)   Natalie has made a taxable gift of $1,000.
C)   Natalie has not made a completed gift because the trust is revocable.
D)   Natalie has made a taxable gift of $474,000.
E)   None of these.F) A) and E)
G) None of the above

Question 19

Isaac is married and wants to transfer the maximum amount of cash to each of his four children and six grandchildren. How much in total can Isaac transfer to his children and grandchildren each year without triggering any taxable gifts?

Accepted Answer

$280,000

Question 20

Including adjusted taxable gifts in the taxable estate causes these gifts to be taxed twice, once under the gift tax and again under the estate tax.

Accepted Answer

A) True 
 B)False

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

The theft of property included in the gross estate is only deductible in calculating the taxable estate if the loss exceeds 10 percent of the decedent's adjusted gross estate.

Correct Answer
verified

Proceeds of life insurance paid due to the death of the decedent are included in the decedent's gross estate if the decedent had the right to designate the beneficiary of the policy.

Correct Answer
verified

Matthew and Addison are married and live in Michigan, a common-law state. For the holidays Addison gave cash gifts of $30,000 to each of her two sons, and Matthew gave $40,000 to his daughter. What is the amount of Addison's taxable gifts if Matthew and Addison opt to gift split?

Correct Answer
verified

The debts of the decedent at the time of death are deducted in calculating the taxable estate.

Correct Answer
verified

Which of the following statements is(are) true?

Correct Answer
verified

The annual exclusion eliminates relatively small transfers of present interests in property.

Correct Answer
verified
True

The income tax benefit derived from a step-up in tax basis should be measured against the estate tax cost of including the property in the decedent's gross estate.

Correct Answer
verified

Which of the following is a true statement?

Correct Answer
verified

The gross estate will not include the value of clothes and other personal items owned by the decedent at the time of death.

Correct Answer
verified

Correct Answer
verified

Proceeds of life insurance paid to the decedent's estate due to the death of the decedent are included in the decedent's gross estate even if the decedent had no ownership rights in the policy at the time of death.

Correct Answer
verified

At his death Trevor had a probate estate consisting of $4 million of property. Which of the following is a true statement about Trevor's estate or estate tax?

Correct Answer
verified

Which of the following transfers is a completed gift?

Correct Answer
verified

Correct Answer
verified

Which of the following transactions would not utilize the "Section 7520 rate" to calculate the value of the transfer?

Correct Answer
verified

The estate and gift taxes share several common features. Which of the following characteristics are common to both the estate and gift taxes?

Correct Answer
verified

A transfer of cash to a bank account held in joint tenancy with the right of survivorship is not a completed gift.

Correct Answer
verified
True

Natalie transferred $500,000 of bonds to a revocable trust with directions to the trustee to pay income to her aunt for five years after which the corpus is to be distributed to Natalie's niece. At year end, the trustee paid $15,000 of income to the aunt. Which of the following is a true statement?

Correct Answer
verified

Isaac is married and wants to transfer the maximum amount of cash to each of his four children and six grandchildren. How much in total can Isaac transfer to his children and grandchildren each year without triggering any taxable gifts?

Correct Answer
verified
$280,000

Including adjusted taxable gifts in the taxable estate causes these gifts to be taxed twice, once under the gift tax and again under the estate tax.

Correct Answer
verified

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

The theft of property included in the gross estate is only deductible in calculating the taxable estate if the loss exceeds 10 percent of the decedent's adjusted gross estate.

Correct AnswerverifiedShow Answer

Proceeds of life insurance paid due to the death of the decedent are included in the decedent's gross estate if the decedent had the right to designate the beneficiary of the policy.

Correct AnswerverifiedShow Answer

Matthew and Addison are married and live in Michigan, a common-law state. For the holidays Addison gave cash gifts of $30,000 to each of her two sons, and Matthew gave $40,000 to his daughter. What is the amount of Addison's taxable gifts if Matthew and Addison opt to gift split?

Correct AnswerverifiedShow Answer

The debts of the decedent at the time of death are deducted in calculating the taxable estate.

Correct AnswerverifiedShow Answer

Which of the following statements is(are) true?

Correct AnswerverifiedShow Answer

The annual exclusion eliminates relatively small transfers of present interests in property.

Correct AnswerverifiedTrue

The income tax benefit derived from a step-up in tax basis should be measured against the estate tax cost of including the property in the decedent's gross estate.

Correct AnswerverifiedShow Answer

Which of the following is a true statement?

Correct AnswerverifiedShow Answer

The gross estate will not include the value of clothes and other personal items owned by the decedent at the time of death.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Proceeds of life insurance paid to the decedent's estate due to the death of the decedent are included in the decedent's gross estate even if the decedent had no ownership rights in the policy at the time of death.

Correct AnswerverifiedShow Answer

At his death Trevor had a probate estate consisting of $4 million of property. Which of the following is a true statement about Trevor's estate or estate tax?

Correct AnswerverifiedShow Answer

Which of the following transfers is a completed gift?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Which of the following transactions would not utilize the "Section 7520 rate" to calculate the value of the transfer?

Correct AnswerverifiedShow Answer

The estate and gift taxes share several common features. Which of the following characteristics are common to both the estate and gift taxes?

Correct AnswerverifiedShow Answer

A transfer of cash to a bank account held in joint tenancy with the right of survivorship is not a completed gift.

Correct AnswerverifiedTrue

Natalie transferred $500,000 of bonds to a revocable trust with directions to the trustee to pay income to her aunt for five years after which the corpus is to be distributed to Natalie's niece. At year end, the trustee paid $15,000 of income to the aunt. Which of the following is a true statement?

Correct AnswerverifiedShow Answer

Isaac is married and wants to transfer the maximum amount of cash to each of his four children and six grandchildren. How much in total can Isaac transfer to his children and grandchildren each year without triggering any taxable gifts?

Correct Answerverified$280,000

Including adjusted taxable gifts in the taxable estate causes these gifts to be taxed twice, once under the gift tax and again under the estate tax.

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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True

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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True

Correct Answer
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Correct Answer
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$280,000

Correct Answer
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