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Prentice Hall's Federal Taxation 2014 Corporations, 27e Chapter 12

Satisfactory Essays

Prentice Hall's Federal Taxation 2014 Corporations, 27e
Chapter C12 The Gift Tax

1) The gift tax is a wealth transfer tax that applies to transfers during a person's lifetime and transfers at death.
Answer: FALSE
Page Ref.: C:12-2
Objective: 1

2) The annual exclusion permits donors to make gifts of $14,000 each to multiple donees.
Answer: TRUE
Page Ref.: C:12-4
Objective: 1

3) Molly sells her car, valued at $30,000, to her nephew Todd for $18,000. Molly has made a taxable gift.
Answer: TRUE
Page Ref.: C:12-7
Objective: 3

4) A qualified disclaimer must be made within nine months after (a) the day the property is transferred, or (b) the day the person receiving the property becomes age 21, whichever is later.
Answer: TRUE …show more content…

B) $6,000.
C) $15,000.
D) $30,000.
Answer: B
Explanation: B) $30,000 × 0.20 = $6,000
Page Ref.: C:12-6 and C:12-7
Objective: 2

18) Barbara sells a house with an FMV of $170,000 to her daughter for $120,000. From this transaction, Barbara is deemed to have made a gift (before the annual exclusion) of
A) $50,000.
B) $170,000.
C) $120,000.
D) $0.
Answer: A
Explanation: A) $170,000 - $120,000 = $50,000
Page Ref.: C:12-7
Objective: 3

19) In the current year, Bonnie, who is single, sells stock valued at $60,000 to Linda for $15,000. Later that year, Bonnie gives Linda $25,000 in cash. Bonnie's taxable gifts from these transfers total
A) $70,000.
B) $59,000.
C) $56,000.
D) $25,000.
Answer: C
Explanation: C)
Total gifts [($60,000 - $15,000) + $25,000]
$70,000
Minus: exclusion
( 14,000)
Taxable gifts
$56,000
Page Ref.: C:12-4 through C:12-7
Objective: 2

20) Identify which of the following statements is true.
A) A taxable gift may occur when property is sold in an arm's length transaction for less than its FMV.
B) An individual can inadvertently make a gift by underestimating a property's fair market value and selling it to a relative for a price below its fair market value.
C) The statutory exemption from the gift tax for payments for medical care requires that the payment be made for a relative.
D) All of the above are false.
Answer: B
Page Ref.: C:12-7
Objective: 3
21) Vincent makes the following property transfers in the current

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