Chapter 9 Explantion - 1 Explanation There is not taxable gift for 2011 He did give $55,000 to the QTP but electing to treat the gift ratability allows

Chapter 9 Explantion - 1 Explanation There is not taxable...

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FFA EA Book Reference: CH 9 Estate Tax and Gift Tax Subsection: Gift tax Subject: Filing requirements 2. Explanation: No gift tax return is required because this gift is below the 2011 annual exclusion amount of $13,000. Correct Answer: D FFA EA Book Reference: CH 9 Estate Tax and Gift Tax Subsection: Gift tax Subject: Filing requirements 3. Explanation: Losses resulting from net operating losses or capital losses sustained by the decedent before death cannot be deducted on the estate's income tax return. FFA EA Book Reference: CH 9 Estate Tax and Gift Tax Subsection: Estate tax Subject: Taxable estate: calculations and payments 4. Explanation: Form 706 is due within 9 months after the date of the decedent's death, plus extensions. FFA EA Book Reference: CH 9 Estate Tax and Gift Tax Subsection: Estate tax Subject: Filing requirements 5. Explanation:
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The following credits can reduce estate tax: the unified credit, credit for federal gift taxes on pre-1977 gifts, a credit for foreign death taxes paid, and the credit for tax on prior transfers (if estate tax is paid on property transferred to the estate from a person who died within 10 years prior or 2 years after the decedent).Congress unified the gift and estate taxes in 1976, reducing a taxpayer's ability to elude the estate tax using lifetime gifts. A taxpayer who pays tax on gifts made before 1977 can claim a credit under 2012 for the gift tax paid on the transfer (if the gifted property is required to be included in the value of the gross estate). Taxable gifts made after 1976 are added to the taxable estate; however, a pre-1977 gift may be part of the gross estate for various reasons. FFA EA Book Reference: CH 9 Estate Tax and Gift Tax Subsection: Estate tax Subject: Taxable estate: calculations and payments 6. Explanation: The irrevocable trust is the only listed item that is not part of Gloria's estate. This is because she relinquished control over the assets of the irrevocable trust and did not retain any interest in the assets. Correct Answer: A FFA EA Book Reference: CH 9 Estate Tax and Gift Tax Subsection: Estate tax Subject: Gross estate 7. Explanation: The payment for medical expenses are a gift because the payment is not directly to the medical institution. Items 2 and 3 do not meet any of the exemptions from gift tax. Tuition paid directly to the university is exempt; however, payments for room and board, books, and supplies do not qualify for this exception. Correct Answer: D FFA EA Book Reference: CH 9 Estate Tax and Gift Tax Subsection: Gift tax Subject: Filing requirements 8. Explanation:
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