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Taxation & Legal Considerations Flashcards

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  1. The generation-skipping transfer (GST) tax applies when assets pass to a 'skip person.' Which of the following is a skip person?

    Answer: The transferor's grandchild

    A skip person is generally a natural person at least two generations below the transferor, such as a grandchild.

  2. A decedent owned a vacation home with a spouse as joint tenants with right of survivorship (JTWROS). How much of the property's FMV is included in the decedent's gross estate?

    Answer: 50%, regardless of contribution

    For property held as JTWROS between spouses, IRC § 2040(b) includes exactly 50% in the first spouse's gross estate regardless of who paid for it.

  3. Which of the following transfers triggers the three-year lookback rule that could pull the asset back into the gross estate under IRC § 2035?

    Answer: Relinquishment of a retained life estate within 3 years of death

    IRC § 2035 recaptures transfers made within three years of death where the decedent had previously retained § 2036–2038 interests such as a life estate.

  4. A surviving spouse inherits an IRA. Which option is unique to spousal IRA beneficiaries and not available to non-spouse beneficiaries?

    Answer: Rolling the inherited IRA into their own IRA

    Only a surviving spouse can roll an inherited IRA into their own IRA, effectively treating it as their own account and deferring RMDs until their own age-73 trigger.

  5. Under the SECURE 2.0 Act, the required beginning date for required minimum distributions (RMDs) from most retirement accounts is age:

    Answer: 73

    SECURE 2.0 moved the RMD starting age to 73 for individuals who turn 72 after December 31, 2022, with a further increase to 75 scheduled for 2033.

  6. An estate advisor recommends a grantor retained annuity trust (GRAT). Which scenario best describes a successful GRAT outcome?

    Answer: Assets inside the GRAT appreciate faster than the § 7520 rate, passing excess to heirs gift-tax-free

    A GRAT succeeds when trust assets outperform the IRS § 7520 hurdle rate; the excess appreciation passes to remainder beneficiaries with little or no gift tax.

  7. Which of the following is NOT a requirement for a gift to qualify for the annual gift tax exclusion under IRC § 2503(b)?

    Answer: The recipient must be a U.S. citizen

    The annual exclusion applies to gifts of present interests regardless of the recipient's citizenship; citizenship is irrelevant for this exclusion.