Generation-Skipping Transfer Tax - Sample Questions 1 - 4

1. Which of the following concerning the GSTT is TRUE?

A) The GSTT annual exclusion amount is $1 million for the 2013 tax year.
B) The GSTT gift is also subject to the gift tax.
C) A great-grandchild would not be considered a skip-beneficiary to the great-grandfather.
The GSTT is not imposed on direct skips.

All of the following are true statements concerning the GSTT EXCEPT:

A) The GSTT is in addition to an estate and gift taxes.
The maximum GSTT rate of tax is 40%.
GSTT transfers do not apply to bequests.
For 2013, each taxpayer is given a $5,250,000 GSTT exemption.

3. Beverly, age 68, decides to make several gifts from her estate in 2013. Which of the following gifts are subject to the GSTT?

A) $60,000 to the daughter (age 12) of her best friend.
$14,000 to her granddaughter (age 19) for a car.
$50,000 to her niece (age 10) to go to Europe.
D) $100,000 paid directly to Harvard University for her grandson's business school tuition.

4. James and Judy are both 72 years old. They have two children (Allen and Aaron). Allen had two children with his first wife Betty (age 50), and their names are Tom and Tanya. Allen died in an automobile accident a few years back while both of his children were in college. Since that time, they both live with Betty. Judy has a $5 million life insurance policy. Which of the following are TRUE statements as they apply to James and Judy?

(1) The grandchild, Tom, is a skip beneficiary.
(2) James gets a $5 million GSTT exclusion that can be carried over to Judy in the event of his death.
(3) Judy can gift $10,000 to each child and grandchild without any GSTT liability.
(4) Aaron is a non-skip beneficiary.
(5) Judy can gift $14,000 to Betty without any GSTT liability.

A) 1, 3 and 5 only
2, 3 and 4 only
1 and 4 only
D) 3, 4 and 5 only


Answer Key
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