Estate Planning Flashcards
7 cards from real CIA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Estate Planning flashcards as text
How does the federal gift tax annual exclusion apply?
Answer: Per donee per year, so a donor can make excluded gifts to any number of people
The annual exclusion applies separately to each donee, so a donor can give up to the exclusion amount to an unlimited number of people each year.
What is required for a married couple to elect gift splitting?
Answer: Both spouses must consent, generally shown on Form 709
Gift splitting treats a gift as made half by each spouse and requires both spouses' consent on a gift tax return.
A grandparent pays a grandchild's $60,000 college tuition directly to the university. What are the gift tax consequences?
Answer: The payment is fully excluded as a qualified transfer for tuition
Under IRC Section 2503(e), tuition paid directly to an educational institution is excluded from gift tax without limit.
A donor gives stock with a $10,000 basis and a $50,000 fair market value. The donee sells it for $55,000. What is the donee's gain?
Answer: $45,000
Gifted appreciated property keeps the donor's carryover basis of $10,000, so the gain is $45,000.
For generation-skipping transfer tax purposes, which of these is a 'skip person' relative to the transferor?
Answer: The transferor's grandchild whose parent (the transferor's child) is living
A grandchild is two or more generations below the transferor and is a skip person unless the predeceased parent exception applies.
In a grantor retained annuity trust (GRAT), what passes to the remainder beneficiaries free of gift tax?
Answer: Appreciation above the IRC Section 7520 hurdle rate over the GRAT term
A zeroed-out GRAT moves to the remaindermen any growth above the Section 7520 rate, with little or no taxable gift.
Which valuation discounts are most often applied to limited partnership interests transferred through a family limited partnership?
Answer: Lack of marketability and lack of control (minority interest)
Limited partners cannot easily sell their interests or control the partnership, which supports marketability and minority discounts.