Corporate Partnership Estate and Gift Taxation
2020 1st Edition Pratt Test Bank / solution manuel
An inter vivos transfer triggers ____. A testamentary transfer triggers ____. - ANSWER:a gift tax; an
estate tax
When a taxpayer transfers property to a trust, what are the two types of interest transferred? How is it
treated for tax purposes. - ANSWER:Income interest and remainder interest. Treated as a gift.
What are the income interest and remainder interest? - ANSWER:Income interest - when the beneficiary
receives income from the transferred property
Remainder interests - when the beneficiary receives the corpus (the property by itself) once the trust
terminates
______ is(are) treated as income to recipients.
a) gifts
b) inheritances
c) both A and B
d) neither A nor B - ANSWER:D
A donor gifted property to a donee, and a donee refused the gift. How is this treated for tax purposes? -
ANSWER:It is not treated as a gift because the donee has to accept it.
,The creation of a joint ownership interest without equal consideration from each co-owner is considered
what for tax purposes? - ANSWER:A gift
John purchases real estate for $50,000 and this property is owned by John and his son as tenants in
common (one half interest each). What is the gift amount that John is taxed on? What if the son
contributed $10M? - ANSWER:$25M; $15M ($25M-10M)
What are the exceptions to the taxation of gifts? - ANSWER:1) Payment of another person's medical or
educational expenses (tuition and fees only), must be paid directly to the provider or educational
institution
2) Political contributions
3) satisfaction of an obligation
4) transfer to civic leagues and social welfare organizations, labor, agricultural, or horticultural
organizations, and business leagues
Which of the following are considered gifts?
1) Cash and property transfers
2) Payments to employees that in substance are compensation for personal services
3) Debt forgiveness to family members
4) Sales at bargain prices to family members
5) Donations of personal services
6) Transfers that can be revoked
7) Loans to family members at bargain interest rates
8) Payments to minor family members for food, clothing, and other reasonable support needs
9) Payments for education and medical expenses that are paid directly to the institution
10) Political contributions
, 11) Transfer of property into trust for the benefit of others
12) Property settlements incident to divorce - ANSWER:1) Cash and property transfers
3) Debt forgiveness to family members
4) Sales at bargain prices to family members
7) Loans to family members at bargain interest rates
11) Transfer of property into trust for the benefit of others
Is a $5,000 child support payment a gift? - ANSWER:No, because it is an obligation.
What is the annual gift exclusion? - ANSWER:$15,000. You don't have to report this to the IRS.
What is required for the $15M gift exclusion to apply? - ANSWER:The donee has a "present interest" in
the property.
What are the two unlimited deductions for both estates and gifts? - ANSWER:Marital deduction for
transfers to spouse and charitable contributions deduction for a transfer to a charity
What is the unified tax credit? - ANSWER:Allows for the transfer of up to $11,180,00 of estates and gifts
before being taxed. It is a lifetime credit, in that it accumulates throughout your life.
John is married to Sarah and this year made a gift of $50,000 to his son. If John and Sarah elect to gift
splitting, how much of the gift is taxable? - ANSWER:Each spouse qualifies for the $15M exclusion, so
they will both show as having made a reportable gift of $10M.
Huey and Wonetta became engaged in April, when Harry gave Wonetta a ring with a value of $50,000. In
July, Huey and Wonetta were married and Huey gave Wonetta a new car worth $75,000. How are these
treated for tax purposes? - ANSWER:The $75,000 is a marital deduction, and $15M is excluded. The
remaining $35M is taxable.
2020 1st Edition Pratt Test Bank / solution manuel
An inter vivos transfer triggers ____. A testamentary transfer triggers ____. - ANSWER:a gift tax; an
estate tax
When a taxpayer transfers property to a trust, what are the two types of interest transferred? How is it
treated for tax purposes. - ANSWER:Income interest and remainder interest. Treated as a gift.
What are the income interest and remainder interest? - ANSWER:Income interest - when the beneficiary
receives income from the transferred property
Remainder interests - when the beneficiary receives the corpus (the property by itself) once the trust
terminates
______ is(are) treated as income to recipients.
a) gifts
b) inheritances
c) both A and B
d) neither A nor B - ANSWER:D
A donor gifted property to a donee, and a donee refused the gift. How is this treated for tax purposes? -
ANSWER:It is not treated as a gift because the donee has to accept it.
,The creation of a joint ownership interest without equal consideration from each co-owner is considered
what for tax purposes? - ANSWER:A gift
John purchases real estate for $50,000 and this property is owned by John and his son as tenants in
common (one half interest each). What is the gift amount that John is taxed on? What if the son
contributed $10M? - ANSWER:$25M; $15M ($25M-10M)
What are the exceptions to the taxation of gifts? - ANSWER:1) Payment of another person's medical or
educational expenses (tuition and fees only), must be paid directly to the provider or educational
institution
2) Political contributions
3) satisfaction of an obligation
4) transfer to civic leagues and social welfare organizations, labor, agricultural, or horticultural
organizations, and business leagues
Which of the following are considered gifts?
1) Cash and property transfers
2) Payments to employees that in substance are compensation for personal services
3) Debt forgiveness to family members
4) Sales at bargain prices to family members
5) Donations of personal services
6) Transfers that can be revoked
7) Loans to family members at bargain interest rates
8) Payments to minor family members for food, clothing, and other reasonable support needs
9) Payments for education and medical expenses that are paid directly to the institution
10) Political contributions
, 11) Transfer of property into trust for the benefit of others
12) Property settlements incident to divorce - ANSWER:1) Cash and property transfers
3) Debt forgiveness to family members
4) Sales at bargain prices to family members
7) Loans to family members at bargain interest rates
11) Transfer of property into trust for the benefit of others
Is a $5,000 child support payment a gift? - ANSWER:No, because it is an obligation.
What is the annual gift exclusion? - ANSWER:$15,000. You don't have to report this to the IRS.
What is required for the $15M gift exclusion to apply? - ANSWER:The donee has a "present interest" in
the property.
What are the two unlimited deductions for both estates and gifts? - ANSWER:Marital deduction for
transfers to spouse and charitable contributions deduction for a transfer to a charity
What is the unified tax credit? - ANSWER:Allows for the transfer of up to $11,180,00 of estates and gifts
before being taxed. It is a lifetime credit, in that it accumulates throughout your life.
John is married to Sarah and this year made a gift of $50,000 to his son. If John and Sarah elect to gift
splitting, how much of the gift is taxable? - ANSWER:Each spouse qualifies for the $15M exclusion, so
they will both show as having made a reportable gift of $10M.
Huey and Wonetta became engaged in April, when Harry gave Wonetta a ring with a value of $50,000. In
July, Huey and Wonetta were married and Huey gave Wonetta a new car worth $75,000. How are these
treated for tax purposes? - ANSWER:The $75,000 is a marital deduction, and $15M is excluded. The
remaining $35M is taxable.
