Table of Contents

Course Learning Objectives. v

Description/Introduction. v

Part 1 - Gift Tax Defined. 1

Unified Transfer Tax System.. 2

Lifetime Exclusion for an Estate. 2

Why Gift Taxes are Required. 3

Timing of a Gift 3

Gifts to an Entity. 4

Crummey Trusts. 4

Gifts to Minors. 5

Outright gifts. 5

2018 Trust Tax Brackets and Rates on Ordinary Income. 5

Guardianship. 5

Custodial arrangements. 6

Present Interest of Gifts to a Minor 6

Qualified State Tuition Programs. 6

Not all Gifts are Subject to Gift Tax. 6

Gift that do not exceed annual exclusion. 7

Gifts to a Spouse. 7

Charitable Gifts. 7

Transfers to charitable organizations not subject to federal gift tax. 7

Political Contributions. 8

Qualified Tuition Payments. 8

Medical Costs. 8

Annual Exclusion Amount 8

Unlimited Donees. 8

Gifts Exceeding $15,000. 9

Present Interest vs. Future Interest 9

Part 1 – Review Questions. 11

Part 2 - Trusts. 12

Trusts Defined. 12

Reasons for Using a Trust 12

Living vs. Testamentary Trusts. 13

Building Blocks of a Trust 13

Trusts - Revocable. 13

Trusts - Living. 14

Reversion Defined. 14

Living Trust Advantages. 14

Living Trust Disadvantages. 14

Pour-Over Will 15

Trusts - Irrevocable. 15

Trusts - Testamentary. 15

The Taxation of Trusts. 16

Grantor Trusts. 16

Grantor Retained Income Trusts. 17

Using Revocable Trusts. 18

Estates Compared to Living Trusts. 18

Using Irrevocable Trusts. 19

2018 Trust Income Tax Rates. 19

Capital Gains Treatment in Trusts. 19

Deduction of Estate Planning Expenses. 19

Deduction of Expenses. 20

Gift Tax with Respect to Trusts. 20

Estate Tax with Respect to Trusts. 20

Unlimited Marital Deduction. 21

Marital Deduction Trust 21

Qualified Terminable Interest Property (QTIP) Trust 21

“A-B” Trusts. 22

“A-B-C” (QTIP) Trust 23

Tax Basis. 24

Alternative Valuation. 24

Revocable Living Trust Clauses. 25

Identification Clause. 25

Trustee Clause. 25

Property Transfer Clause. 25

Revocation and Amendment Clause. 25

Income and Principle Clause. 25

Recital Clause. 26

Trustee Requirements. 26

Advantages of Hiring Corporate Trustees. 26

Advantages of Hiring Individual Trustees. 27

Trust Termination Clause. 27

Life Insurance Trust 27

Gift Splitting. 27

Consent to Gift Split Applies to All Gifts. 27

Gift Splitting Requirements. 29

Community Property States. 31

Gift Tax Return. 31

Gift Tax Return Due Date: 33

Valuation. 33

Real Estate. 34

Valuation Understatement 35

Computing Gift Tax. 36

Generation Skipping Transfers. 37

Transfer Types. 37

Exemption Amount 38

How to compute generation skipping transfer tax. 38

Generation Skipping Terminations Tax (GSTT) 39

Generation Skipping Distribution Tax (GSDT) 39

Direct Skip Gift Tax (DSGT) 39

Direct Skip Estate Tax (DSET) 40

Filing the return and paying the GSTT. 40

Gifts and bequests from expatriates. 41

Tax Cuts and Jobs Act – Changes related to Estate, Gift, and Generation-Skipping Transfers Taxes 43

Modifications to Estate, Gift, and Generation-Skipping Transfers Taxes. 43

Part 2 – Review Questions. 53

Review Question Answers. 54

Part 1 – Review Question Answers. 54

Part 2 – Review Question Answers. 57

Glossary. 60

Index. 63

Final Examination. 65

CPASelfstudy.com Course Evaluation. 68