Reg Other Tax From Cpafree

Front 1

Mr. and Mrs. Roberto Hamrick own considerable investments in marketable securities. During Year One, they give a portion of these investments worth $16,000 to Mrs. Jane Sanderson, Mrs. Hamrick’s sister. The shares had originally cost $13,000. In connection with the determination of any applicable gift tax, what amount is taxable?

Back 1

A person can convey to another person gifts up to a certain value each year without being subject to a gift tax. That limit changes over time based on inflation and has recently been around $12,000. Here, Mr. and Mrs. Hamrick each gave a gift valued at $8,000 to Mrs. Sanderson. That is well within the limit so that no gift tax is appropriate.

Front 2

Normally, estate assets are valued as of the date of death. However, the executor does have the right to value the assets at___________

Back 2

an alternative date.
This occurs when the overall value has gone down so that money can be saved on the amount of estate taxes to be paid. The alternative date is six months after death or the date of conveyance, whichever comes first.

Front 3

Lana Roswell died early in Year One with an estate valued at several million dollars. In her will, she left a considerable amount of money (approximately one million) to charitable organizations. In determining the amount of her taxable estate for federal estate tax purposes, what amount is subtracted in connection with these charitable bequests?

Back 3

In determining the amount of a taxable estate, certain deductions are allowed for costs such as funeral expenses, administrative expenses, debts and mortgages, casualty losses, marital bequests, and charitable bequests. There is no limitation to the amount that can be deducted as a charitable bequest.

Front 4

To determine the amount of a taxable estate, certain deductions are allowed for costs such as________

Back 4

funeral expenses, debts, administrative expenses, debts at death, and charitable bequests. Bequests to a spouse are deductible but no other personal bequests (even to a son or daughter) can be used as a deduction.

Front 5

The Human Health Organization is a tax-exempt organization. During the current year, Human Health reported $22,000 in unrelated business income. Is taxable or not?

Back 5

Unrelated business income over a set limit is normally taxable to a tax-exempt organization. However, a number of exceptions are available. One of those is that the income is not taxed if generated entirely by the work of volunteers.

Front 6

The Haskins Society is a tax-exempt organization. Which of the following statements is not true about tax-exempt organizations?


A Unless the organization is a church or very small, it must officially file in order to gain tax exempt status.
B Unless the organization is a church or very small, it must file an annual informational return for tax purposes.
C If an organization is tax-exempt, then donations that it accepts can be taken as itemized deductions by the individuals making the gift.
D Even with a tax-exempt organization, unrelated business income above a certain level is still subject to income taxation.

Back 6

Regardless of their mission and intent, an organization (unless a church or very small) cannot simply assume that it has tax-exempt status. It must file to gain that status and must then file an annual form (Form 990) to provide ongoing information. Being tax-exempt does not keep the organization from having to pay income taxes if it generates unrelated business income over a maximum dollar limit. Finally, being tax-exempt does allow donors to take a gift as tax deduction but only in certain cases. For example a Section 501 (c)(3) tax-exempt organization (created for charitable, educational, or scientific purposes) offers this benefit. In contrast a gift to a Section 501 (c)(4) tax-exempt organization (an advocacy group) cannot be claimed by the donor as an itemized deduction.