CANNON TRUST 1 EXAM QUESTIONS
AND ANSWERS 100% PASS.
What is the Applicable Credit Amount for gifts? - ANS $ 5,541,800 NEED TO UPDATE
What is the Applicable exclusion Amount? - ANS $13,990,000
What is the Annual Exclusion Amount? - ANS $ 19,000
Who is liable for gift tax? - ANS Donor, Donor's estate, and Donee if Donor fails to pay
Federal Estate tax applies to the transfer of what? - ANS Property at death
How is Tentative Gif Tax Calculated?t - ANS Total gifts of Donor - Annual exclusions, marital
deduction, charitable deduction = taxable gift. Add prior Taxable gifts to reach total taxable gifts
which is a part of tentative tax. Subtract Applicable Credit = gift tax due
What credits are available against the Estate Tax? - ANS Unified Credit,
Credit for Gift Taxes paid,
Credit for tax on prior transfers, and
Credit for foreign death taxes
When must Form 706 be filed? - ANS Within 9 months of Date of Death
2026 STUDY MATERIAL @COPYRIGHT RESERVED 1
,What is the reporting requirement for Form 706 - ANS If the value of the gross eestate at the
date of death, plus taxable gifts made after 1976, is more than the BASIC EXCLUSION AMOUNT.
—Will also want to do it if
electing portability
If there is a unique piece of property want on record to value incl businesses so IRS agrees on
value of underlying property
Crypto, stock certs, cash, and royalties are examples of what type of property -
ANS Intangible Personal Property
Mineral, water, and air rights are an example of what type of property? - ANS Intangible Real
Property
What interest is both Present and Future, where the title holder has full rights of disposition? -
ANS Fee Simple. It is the most complete, outright form of ownership
What type of property interest terminates at death of the holder, reverting back to Grantor or
passes to predetermined remainders and thus holder has no rights of disposition? - ANS Life
estate
What type of property interest is held for a specified term of hears with no right of disposition
(reverts back to Grantor or passes predetermined)? - ANS Estate for years
How is the economy measured in modern econimics? - ANS GDP, GNP
Difference between GDP and GNP? - ANS GDP = ONLY domestic products ; GNP= both
domestic AND international activities
What type of interest does a Life Estate create? - ANS Determinable interest / Subject to
condition
2026 STUDY MATERIAL @COPYRIGHT RESERVED 2
,What is it called when property passes based upon a condition or failure of something to occur?
- ANS Determinable Interest, interest subject to condition
What type of property interest will or may be returned to original owner? - ANS Reversionary
interest
What type of property interest will or may pass to successive owners at a given time or
occurence of an event? - ANS Remainder interest
List the four types of property that qualify as a present interest: - ANS Fee Simple*
Life Estate
Estate for Years
Determinable or Conditional*
List the four types of property that qualify as future interest: - ANS Fee Simple,*
Reversionary,
Remainder,
Determinable or Conditional*
A owns a Fee Simple interest and makes a transfer. What is the interest of each of the below
parties:
1. A to B
2. A to B for life then to C
3. A to B for Life
4. A to B for 10 years and then to C
5. A to B as long as B is found drug free in annual tests
6. A to B for 10 years - ANS 1. Fee Simple Absolute (B)
2. Life Estate (B) Remainder (C)
2026 STUDY MATERIAL @COPYRIGHT RESERVED 3
, 3. FSA with right of reversion (A), Life Estate (B)
4. Estate for years (B), Remainder (C)
5. Possibility of Reverter (A), Conditional Fee Simple subject to condition subsequent
6. FSA (A), Estate for Years
Nominal and Real adjustments apply to what: - ANS GDP Adjustments
What are the final goods and services at current market prices? - ANS Nominal GDP
Adjustment
"GDP is up 4% and Inflation is up 3%. This means 4-3% = 1% Real Gross Domestic Product"
What is the GDP Real adjustment? - ANS Adjustment for inflation
"GDP is up 4% and Inflation is up 3%. This means 4-3% = 1% Real Gross Domestic Product"
What type of ownership is subject to probate, transfers via will or intestate estate, and gives full
property rights in life and death? - ANS Sole Ownership
What does the following describe: Weekly unemployment claims, avg weekly manufacture
hours, new orders for manufactures, vendor performance/deliveries slow, number of building
permits and private housing units, stock prices, money supply available to spend/lend, interest
rate spread, index o? - ANS "Leading Indicators"
10 economic indicators used to predict turns in the biz cycle issued by the bureau of economic
analysis
What does the following describe: Avg duration of unemployment,, inventories to sales ratio,
manufacturing, and trade; labor costs per unit of output, average prime rate, number of
commercial and industrial loans, amount of consumer installment credit to personal income
ratio, and consumer price index for service? - ANS These seven factors are Lagging Economic
Indicators that move with, as to opposed to before or after, the business cycle.
What does the following describe: Employees in non-agricultural jobs, personal income -
transfer payments (amt living paycheck-to-paycheck), industrial production, and
2026 STUDY MATERIAL @COPYRIGHT RESERVED 4
AND ANSWERS 100% PASS.
What is the Applicable Credit Amount for gifts? - ANS $ 5,541,800 NEED TO UPDATE
What is the Applicable exclusion Amount? - ANS $13,990,000
What is the Annual Exclusion Amount? - ANS $ 19,000
Who is liable for gift tax? - ANS Donor, Donor's estate, and Donee if Donor fails to pay
Federal Estate tax applies to the transfer of what? - ANS Property at death
How is Tentative Gif Tax Calculated?t - ANS Total gifts of Donor - Annual exclusions, marital
deduction, charitable deduction = taxable gift. Add prior Taxable gifts to reach total taxable gifts
which is a part of tentative tax. Subtract Applicable Credit = gift tax due
What credits are available against the Estate Tax? - ANS Unified Credit,
Credit for Gift Taxes paid,
Credit for tax on prior transfers, and
Credit for foreign death taxes
When must Form 706 be filed? - ANS Within 9 months of Date of Death
2026 STUDY MATERIAL @COPYRIGHT RESERVED 1
,What is the reporting requirement for Form 706 - ANS If the value of the gross eestate at the
date of death, plus taxable gifts made after 1976, is more than the BASIC EXCLUSION AMOUNT.
—Will also want to do it if
electing portability
If there is a unique piece of property want on record to value incl businesses so IRS agrees on
value of underlying property
Crypto, stock certs, cash, and royalties are examples of what type of property -
ANS Intangible Personal Property
Mineral, water, and air rights are an example of what type of property? - ANS Intangible Real
Property
What interest is both Present and Future, where the title holder has full rights of disposition? -
ANS Fee Simple. It is the most complete, outright form of ownership
What type of property interest terminates at death of the holder, reverting back to Grantor or
passes to predetermined remainders and thus holder has no rights of disposition? - ANS Life
estate
What type of property interest is held for a specified term of hears with no right of disposition
(reverts back to Grantor or passes predetermined)? - ANS Estate for years
How is the economy measured in modern econimics? - ANS GDP, GNP
Difference between GDP and GNP? - ANS GDP = ONLY domestic products ; GNP= both
domestic AND international activities
What type of interest does a Life Estate create? - ANS Determinable interest / Subject to
condition
2026 STUDY MATERIAL @COPYRIGHT RESERVED 2
,What is it called when property passes based upon a condition or failure of something to occur?
- ANS Determinable Interest, interest subject to condition
What type of property interest will or may be returned to original owner? - ANS Reversionary
interest
What type of property interest will or may pass to successive owners at a given time or
occurence of an event? - ANS Remainder interest
List the four types of property that qualify as a present interest: - ANS Fee Simple*
Life Estate
Estate for Years
Determinable or Conditional*
List the four types of property that qualify as future interest: - ANS Fee Simple,*
Reversionary,
Remainder,
Determinable or Conditional*
A owns a Fee Simple interest and makes a transfer. What is the interest of each of the below
parties:
1. A to B
2. A to B for life then to C
3. A to B for Life
4. A to B for 10 years and then to C
5. A to B as long as B is found drug free in annual tests
6. A to B for 10 years - ANS 1. Fee Simple Absolute (B)
2. Life Estate (B) Remainder (C)
2026 STUDY MATERIAL @COPYRIGHT RESERVED 3
, 3. FSA with right of reversion (A), Life Estate (B)
4. Estate for years (B), Remainder (C)
5. Possibility of Reverter (A), Conditional Fee Simple subject to condition subsequent
6. FSA (A), Estate for Years
Nominal and Real adjustments apply to what: - ANS GDP Adjustments
What are the final goods and services at current market prices? - ANS Nominal GDP
Adjustment
"GDP is up 4% and Inflation is up 3%. This means 4-3% = 1% Real Gross Domestic Product"
What is the GDP Real adjustment? - ANS Adjustment for inflation
"GDP is up 4% and Inflation is up 3%. This means 4-3% = 1% Real Gross Domestic Product"
What type of ownership is subject to probate, transfers via will or intestate estate, and gives full
property rights in life and death? - ANS Sole Ownership
What does the following describe: Weekly unemployment claims, avg weekly manufacture
hours, new orders for manufactures, vendor performance/deliveries slow, number of building
permits and private housing units, stock prices, money supply available to spend/lend, interest
rate spread, index o? - ANS "Leading Indicators"
10 economic indicators used to predict turns in the biz cycle issued by the bureau of economic
analysis
What does the following describe: Avg duration of unemployment,, inventories to sales ratio,
manufacturing, and trade; labor costs per unit of output, average prime rate, number of
commercial and industrial loans, amount of consumer installment credit to personal income
ratio, and consumer price index for service? - ANS These seven factors are Lagging Economic
Indicators that move with, as to opposed to before or after, the business cycle.
What does the following describe: Employees in non-agricultural jobs, personal income -
transfer payments (amt living paycheck-to-paycheck), industrial production, and
2026 STUDY MATERIAL @COPYRIGHT RESERVED 4
