True False True False True False True False True False True False True False True False True False estate True False True False ch25 Student 1 The amount of the estate tax is directly related to the amount of taxable gifts 2 The Federal transfer taxes are calculated using cumulative lifetime transfers 3 An exemption equivalent is the amount of annual gifts that is automatically exempt from the gift tax 4 The exemption equivalent was repealed in 1976 5 The unified credit is designed to allow a minimum amount of lifetime transfers without triggering the imposition of a transfer tax True False 6 For 2011 the exemption equivalent for the estate tax is 5 million 7 The marital and charitable deductions are common to both the estate tax and the gift tax formulas 8 The estate tax is imposed on testamentary transfers 9 The gift tax is imposed on intervivos lifetime transfers 10 The tax rate schedule on taxable transfers has a maximum tax rate of 35 for 2011 11 The probate estate consists of all property owned by the decedent that is excluded from the gross 12 No deductions are allowed when calculating the taxable estate 13 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 True False 14 The gross estate may contain property transfers that are not included in the probate estate 15 The gross estate will not include the value of clothes and other personal items owned by the decedent at True False the time of death True False 16 The gross estate will include the total value of all real property owned by the decedent at the time of death regardless of whether the decedent co owned the property as tenants in common or as joint tenants with the right of survivorship True False 17 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 True False 18 The gross estate includes the value of half of real property owned by a decedent and spouse in joint tenancy with the right of survivorship True False 19 The gross estate always includes the value of half of any real property owned by a decedent and another person in joint tenancy with the right of survivorship True False 20 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 True False 21 Property is included in the gross estate at the value a willing buyer would pay a willing seller neither being under any compulsion to buy or to sell and both have reasonable knowledge of the relevant facts True False 22 A present interest is the right to currently enjoy property or receive income payments from property True False True False 23 The debts of the decedent at the time of death are deducted in calculating the taxable estate 24 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 True False 25 The testamentary transfer of property to a qualified charity is deductible in calculating the taxable estate without any ceiling limitation True False 26 Adjusted taxable gifts are included when calculating the taxable estate but are not subject to double taxation because a tax credit is provided for taxes payable on adjusted taxable gifts True False 27 A couple who is married at the time of completing a gift can elect to file a joint gift tax return 28 Only complete gifts are subject to the Federal gift tax 29 A completed gift must be irrevocably relinquished by the donor 30 A gratuitous transfer of cash to an individual who uses the cash to pay medical expenses is not subject to 31 A future interest is a right to receive income or property in the future 32 The annual exclusion eliminates relatively small transfers of present interests in property 33 The annual exclusion applies to cumulative gifts made to each donee over the course of the year True False True False True False a gift tax True False True False True False True False 34 A transfer of cash to a bank account held in joint tenancy with the right of survivorship is not a completed gift True False constitute a completed gift True False 35 A withdrawal of money from a bank account held in joint tenancy with the right of survivorship may 36 When a gift splitting election is made gifts made by either spouse during the year will be treated as if each spouse made one half of the transfer True False 37 Both spouses must consent to any gift splitting election 38 The gift splitting election only applies to gifts made by taxpayers who reside in community property True False states True False True False True False True False True False True False True False 39 A transfer of a terminable interest will not generally qualify for a marital deduction 40 A terminable interest in property is any interest that terminates during the current year 41 A gift tax return does not need to be filed unless the taxpayer has made current gifts in excess of the 42 The tax on cumulative taxable gifts is reduced by the unified credit regardless of whether any unified unified credit True False credit was used in prior years True False 43 A trust is a legal entity whose purpose is to hold and administer property for beneficiaries 44 A fiduciary is a legal entity that can only exist for a year 45 A serial gift strategy consists of arranging a trust to maximize the value of the unified credit 46 A serial gift strategy uses multiple gifts to maximize the value of the annual exclusion 47 A bypass provision in a will requires a decedent to have a taxable estate in order to use a unified credit to reduce total estate taxes on a married couple True False 48 Property inherited from a decedent has an adjusted basis equal to the value of the property included in the decedent s estate True False 49 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 True False 50 Life insurance is an asset that can be used to fund a trust to support a surviving spouse and yet may not be included in the decedent s gross estate True False 51 A gratuitous transfer of property made during the lifetime of the donor is called A an incomplete gift B a testamentary