Estate_11th_Ch_5_MC_Solutions.pdf - ESTATE PLANNING 11TH ED...

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ESTATE PLANNING, 11TH ED. C HAPTER 5 E ND OF C HAPTER M ULTIPLE C HOICE S OLUTIONS 1. The correct answer is a. Because Grandmother Jones reserves the right to revoke the trust, she has not made a completed transfer to Lisa and thus she does not have a taxable gift. 2. The correct answer is a. Because the loan is for less than $100,000 and Charisse has less than $1,000 in net investment income, Jerry does not have to impute any interest on the loan and, as such, has not made a gift of interest to Charisse during the current year. 3. The correct answer is d. Mary and Emile can each transfer $11,180,000 tax free during their lifetimes. Mary and Emile can also make a gift of $15,000 each during the year to qualify under the annual exclusion. In total to their son, Mary and Emile can transfer $22,390,000 (($11,180,000 x 2)+($15,000 x 2)=$22,390,000. 4. The correct answer is a. The interest-free loan is not subject to gift tax because the loan is below $10,000 and meets the exclusion from

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