ACCT 614
Estate, Trust, and Gift Taxation
MIDTERM EXAM REVIEW
©LU 2024/2025
,1. Multiple Choice: Which of the following is not a deductible
expense when calculating the taxable income of an estate?
A) State inheritance taxes
B) Funeral expenses
C) Charitable contributions
D) Capital gains on property sales
Answer: D) Capital gains on property sales
Rationale: Capital gains on property sales are not considered
deductible expenses when calculating the taxable income of an
estate. They are instead subject to capital gains tax.
2. Fill-in-the-Blank: The unified credit against estate tax for the year
2021 was __________.
Answer: $11,700,000
Rationale: The unified credit provides a credit against the estate
tax due. For the year 2021, the amount was set at $11,700,000.
3. True/False: The annual exclusion for gift tax applies per
recipient, not per donor.
©LU 2024/2025
, Answer: True
Rationale: The annual exclusion for gift tax allows a donor to give
a certain amount to as many individuals as they wish without
incurring a gift tax, which means it applies per recipient.
4. Multiple Response: Select all that apply. Which of the following
are considered 'future interests' in property for gift tax purposes?
A) Reversionary interests
B) Remainder interests
C) Powers of appointment
D) Present interests
Answers: A) Reversionary interests, B) Remainder interests, C)
Powers of appointment
Rationale: Future interests in property, which are not eligible for
the annual exclusion for gift tax, include reversionary interests,
remainder interests, and powers of appointment. Present interests
are not considered future interests.
5. Multiple Choice: A trust qualifies as a 'grantor trust' if:
A) The grantor retains the right to revoke the trust.
B) The trust's income is only from municipal bonds.
C) The beneficiaries are all charitable organizations.
D) It is irrevocable and has only one beneficiary.
©LU 2024/2025
Estate, Trust, and Gift Taxation
MIDTERM EXAM REVIEW
©LU 2024/2025
,1. Multiple Choice: Which of the following is not a deductible
expense when calculating the taxable income of an estate?
A) State inheritance taxes
B) Funeral expenses
C) Charitable contributions
D) Capital gains on property sales
Answer: D) Capital gains on property sales
Rationale: Capital gains on property sales are not considered
deductible expenses when calculating the taxable income of an
estate. They are instead subject to capital gains tax.
2. Fill-in-the-Blank: The unified credit against estate tax for the year
2021 was __________.
Answer: $11,700,000
Rationale: The unified credit provides a credit against the estate
tax due. For the year 2021, the amount was set at $11,700,000.
3. True/False: The annual exclusion for gift tax applies per
recipient, not per donor.
©LU 2024/2025
, Answer: True
Rationale: The annual exclusion for gift tax allows a donor to give
a certain amount to as many individuals as they wish without
incurring a gift tax, which means it applies per recipient.
4. Multiple Response: Select all that apply. Which of the following
are considered 'future interests' in property for gift tax purposes?
A) Reversionary interests
B) Remainder interests
C) Powers of appointment
D) Present interests
Answers: A) Reversionary interests, B) Remainder interests, C)
Powers of appointment
Rationale: Future interests in property, which are not eligible for
the annual exclusion for gift tax, include reversionary interests,
remainder interests, and powers of appointment. Present interests
are not considered future interests.
5. Multiple Choice: A trust qualifies as a 'grantor trust' if:
A) The grantor retains the right to revoke the trust.
B) The trust's income is only from municipal bonds.
C) The beneficiaries are all charitable organizations.
D) It is irrevocable and has only one beneficiary.
©LU 2024/2025
