Chapter I1 An Introduction to Taxation

51) In 2014, an estate is not taxable unless the sum of the taxable estate and taxable gifts made after 1976 exceeds

A) $1,000,000.

B) $3,500,000.

C) $5,000,000.

D) $5,340,000.

52) Eric dies in the current year and has a gross estate valued at $6,500,000. The estate incurs funeral and administrative expenses of $100,000 and also pays off Eric's debts which amount to $250,000. Eric bequeaths $600,000 to his wife. Eric made no taxable transfers during his life. Eric's taxable estate will be

A) $210,000.

B) $5,550,000.

C) $6,150,000.

D) $6,500,000.

53) Thomas dies in the current year and has a gross estate valued at $3,000,000. During his lifetime (but after 1976) Thomas had made taxable gifts of $400,000. The estate incurs funeral and administrative expenses of $100,000 and also pays off Thomas' debts which amount to $300,000. Thomas bequeaths $500,000 to his wife. What is the amount of Thomas' tax base, the amount on which the estate tax is computed?

A) $2,100,000

B) $2,500,000

C) $2,600,000

D) $3,400,000

54) Which of the following statements is incorrect?

A) Property taxes are levied on real estate.

B) Excise taxes are assessed on items such as gasoline and telephone use.

C) Gift taxes are imposed on the recipient of a gift.

D) The estate tax is based on the fair market value of property at death or the alternate valuation date.

55) Denzel earns $130,000 in 2014 through his job as a sales manager. What is his FICA tax?

A) $9,139

B) $8,951

C) $8,698

D) $9,945

56) Jillian, a single individual, earns $230,000 in 2014 through her job as an accounting manager. What is her FICA tax?

A) $10,859

B) $17,595

C) $10,589

D) $8,951

57) Martha is self-employed in 2014. Her business profits are $140,000. What is her self-employment tax?

A) $21,420

B) $18,568

C) $18,159

D) None of the above.