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Why are the gift and estate taxes called wealth transfer taxes? What is
the tax base for computing each of these taxes?
I:1-7
Cathy, who is single, makes gifts of $50,000 to each of her two adult
children.
·
a.Who is primarily liable for the gift tax on the two gifts, Cathy
or the two children?
·
b.If Cathy has never made a taxable gift in prior years, is a gift
tax due on the two gifts?
2-1
·
a.
The tax law refers to gross income, yet the term gross income is not
found on Form 1040. Explain.
·
b.Why is it important to understand the concept of gross income
even though the term is not found on Form 1040?
2-4
List the conditions that must be met in order to claim a dependency
exemption for qualifying children and qualifying relatives. Briefly
explain each one.
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