CTA Estate, Gift, and Trust Taxation 1 — Questions and Answers
Question 1: What is the federal estate tax exemption (unified credit) for 2024?
- $5,490,000
- $11,700,000
- $13,610,000 (Correct answer)
- $12,920,000
Correct answer: $13,610,000
The federal estate and gift tax exemption is $13,610,000 per individual in 2024.
Question 2: What is the annual gift tax exclusion per recipient for 2024?
- $15,000
- $16,000
- $17,000
- $18,000 (Correct answer)
Correct answer: $18,000
The annual gift tax exclusion is $18,000 per recipient in 2024, allowing tax-free gifts without reducing the lifetime exemption.
Question 3: Which federal form is used to file the estate tax return?
- Form 709
- Form 706 (Correct answer)
- Form 1041
- Form 990
Correct answer: Form 706
Form 706 (United States Estate Tax Return) is filed by the executor of a decedent's estate when the gross estate exceeds the filing threshold.
Question 4: The step-up in basis at death allows heirs to:
- Deduct the decedent's unrealized losses
- Receive inherited assets with a cost basis equal to fair market value at date of death (Correct answer)
- Avoid paying any capital gains on inherited property forever
- Transfer assets tax-free using the annual exclusion
Correct answer: Receive inherited assets with a cost basis equal to fair market value at date of death
Assets inherited from a decedent receive a new cost basis equal to fair market value at the date of death, potentially eliminating built-in capital gains.
Question 5: Which type of trust is included in the grantor's gross estate at death?
- Irrevocable life insurance trust (ILIT)
- Charitable remainder trust (CRT)
- Revocable living trust (Correct answer)
- Grantor retained annuity trust after the term ends
Correct answer: Revocable living trust
Assets in a revocable living trust are included in the grantor's taxable estate because the grantor retains the right to revoke or amend the trust.
Question 6: The generation-skipping transfer (GST) tax applies to transfers to:
- Children of the decedent
- Spouses of the decedent's children
- Grandchildren and other skip persons (Correct answer)
- Charities receiving bequests
Correct answer: Grandchildren and other skip persons
The GST tax applies to transfers to skip persons, which are individuals who are two or more generations below the transferor, such as grandchildren.
CTA Estate, Gift, and Trust Taxation 1
What is the federal estate tax exemption (unified credit) for 2024?