Question 7

Donor makes a gift to the donee. Which of the following is true with respect to the basis of the property?

Question 7 options:

A - The donor's basis is always carried over to the donee.

B - The donor's basis is always carried over if the property is transferred at a loss

C - The donee acquires the donor's basis as long as the property is transferred at a gain

D - The donee's basis is equal to the FMV of the property on the date of the transfer

Question 8

Which of the following is true about the special split gift provision?

Question 8 options:

A - A gift made after one spouse dies can be split

B - The split gift provision is usually used with community property

C - When the election is made, gifts made by either spouse are treated as made one-half by each spouse

D - A couple can select which gifts made during the year will be subject to the split gift treatment

Question 9

Which of the following is not a generation-skipping transfer?

Question 9 options:

A - A direct skip

B - A taxable distribution

C - A taxable termination

D - A taxable redemption

Question 10

Transfers to a skip person can be protected from the generation-skipping transfer tax using all of the following except:

Question 10 options:

A - An annual exclusion

B - An exclusion for certain transfers for educational and medical expenses

C - An exemption

D - A unified credit

Question 11

John transferred property to a trust for the benefit of his son and his grandchildren. What type of generation-skipping transfer occurs when the son dies?

Question 11 options:

A - A direct skip

B - A taxable distribution

C - A taxable termination

D - Not a generation-skipping transfer

Question 12

An asset deemed to be income in respect of a decedent (IRD) is:

Question 12 options:

A - Not taxed

B - Taxed to the recipient of the payment

C - Taxed to the estate

D - Credited to the estate

Question 13

A trust with one income beneficiary earns $20,000 of income for the year. It distributes $15,000 of that income to the beneficiary. On how much income will the trust be taxed on?

Question 13 options:

A - $0

B - $5,000

C - $15,000

D - $20,000

Question 14

Harry Jenkins, a widower, owned 10 acres of land that he purchased in 1994 for $5,000 per acre. On the date of Harry's death, June 30, 2009, the land was valued at $10,000 per acre. Harry's only child is Elizabeth. If after inheriting the land, Elizabeth sells the property in 2011 for $200,000, which of the following statements correctly summarizes the potential federal tax consequences to Elizabeth?

Question 14 options:

A - Elizabeth's gain will be zero because she is Harry's sole heir

B - Elizabeth's gain will be $100,000

C - Elizabeth will be required to recognize a gain of $200,000 even though she is Harry's sole heir

D - Elizabeth's gain will be $150,000