Fundamentals of Estate Planning Test: HS-330

A father plans to create a trust for the benefit of his 22-year-old son and wishes to take advantage of the gift tax annual exclusion. He has named a bank as trustee. Which of the following trust provisions would cause the gifts to be ineligible to qualify for the gift tax annual exclusion?

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The trust income is to be paid to the son or accumulated at the discretion of the trustee.

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The income is to be accumulated until the son reaches age 32 when all accumulated income and principal are to be distributed to him.

A.

1 only

B.

Neither 1 nor 2

C.

Both 1 and 2

D.

2 only

Which of the following statements concerning charitable remainder annuity trusts is correct?

A. It provides a fixed annuity income interest to a qualified charity.

B. The donor receives an estate tax charitable deduction for the value of the remainder interest.

C. The term of charitable remainder annuity arrangements is limited to 10 years.

D. The interest paid to the charity must be paid at least quarterly.

To qualify the seller of property for installment sale tax treatment, the transaction must meet which of the following conditions?

A. There must be no more than ten installments.

B. All installments must be in equal amounts of principal.

C. At least 30 percent of the purchase price must be paid in the year of sale.

D. The entire purchase price must not be paid in the taxable year of sale.