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Chapter 12: Wealth Transfer Taxes 1Chapter 12 Wealth Transfer TaxesTrue-False: Insert Tfor Trueand F for False before the questions._____
1. The gift tax and estate taxes were imposed in 1932 and 1916, respectively._____ 2. A taxpayer can elect to pay a gift tax rather than use part of his or her unified credit._____ 3. Painting a house for your mother is not a taxable gift._____ 4. Putting cash into a joint bank account results in a gift to the joint tenant when deposited._____ 5. A trust always involves at least three different individuals._____ 6. With a revocable trust, the grantor can change the terms of a trust at will._____ 7. Payment to a college for a grandchild’s tuition is not a taxable gift._____ 8. Gifts are valued at their fair market value on the date of gift and the donee takes this fair market value as basis._____ 9. Only gift taxes on a present interest in property are eligible for the unified credit._____ 10. Gift splitting allows a married couple to use both their annual exclusions in determining taxable gifts._____ 11. Gifts to most charities are not subject to gift taxes. _____ 12. The kiddie tax applies to all unearned income of a child under 19._____ 13. Probate determines the property included in a decedent’s taxable estate._____ 14. A taxpayer must not retain any incidents of ownership in a life insurance policy on his or her life to have it excluded from his or her taxable estate._____ 15. The executor can elect the alternative valuation date only if both the value of the estate and theestate tax are reduced._____ 16. No estate tax is due if a husband leaves his entire estate to his wife._____ 17. The tax on generation skipping transfers has been repealed.Test Bank Answers: True-False1. True2. False3. True 4. False 5. False 6. True7. True8. False9. False10. True11. True12. False
2 Taxation for Decision Makers Test Bank13. False14. True15. True16. True17. FalseShort-Answer Questions: Provide a brief written answer to each of the following questions.1.What values are used for determining the taxes on taxable estates and taxable gifts? 2.What exclusion removes small gifts from the taxable gift base?3.Who are the principal parties to a trust? Briefly define each.4.What is an income beneficiary?5.What is a remainderman?6.What is the benefit of the gift-splitting election?7.What is the purpose of the kiddie tax?8.What is the gross estate of a decedent?9. How does the probate estate differ from the gross estate?10.What is the alternative valuation date? What limit is placed on its use?11.Why do we call the gift and estate rate schedule a unified schedule?12.What is the difference between the estate tax and the estate income tax?13. Explain the difference between a simple trust and a complex trust?Test Bank Answers: Short-Answer Questions