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Exam 27: The Federal Gift and Estate Taxes

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Question 61

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Match each statement with the correct choice. Some choices may be used more than once or not at all. -Credit for tax on prior transfers (under § 2013)

A) In the current year, Debby, a widow, dies. Two years ago she inherited a large amount of wealth from her brother.
B) Death does not defeat an owner's interest in property.
C) Exists only if husband and wife are involved.
D) A type of state tax on transfers by death.
E) Must decrease the amount of the gross estate.
F) Annual exclusion not allowed.
G) Cumulative in effect.
H) Right of survivorship present as to type of ownership.
I) Avoids the terminable interest rule of the marital deduction.
J) Exemption equivalent.
K) Bypass amount.
L) No correct match provided.

M) G) and I)
N) A) and J)

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Question 62

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For Federal estate tax purposes, the gross estate cannot include property the decedent no longer owns.

A) True
B) False

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Question 63

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At the time of his death, Gene held a Roth IRA account with his wife as the designated beneficiary. The IRA is included in Gene's gross estate.

When one spouse predeceases the other, the credit for prior transfers does not apply. a. Why? b. Under what circumstances might the credit apply?

Classify each statement appropriately. -Casualty loss to property after the death of the owner.

Classify each statement appearing below. -Using his own funds, Horace establishes a savings account designating ownership as follows: "Horace and Nadine as joint tenants with right of survivorship." Nadine predeceases Horace.

Eric dies at age 96 and is survived by his third wife, Monique (age 22), and a granddaughter, Paula (age 50). Eric's will divides his $11 million estate between these two survivors. Both of these transfers are subject to the generation skipping transfer tax (GSTT).

Lyle and Kelly are brother and sister. Using his funds, Lyle purchases land, listing title as: "Lyle and Kelly, joint tenants with right of survivorship." If Kelly dies first, none of the land is included in her gross estate.

Match each statement with the correct choice. Some choices may be used more than once or not at all. -Election to split gifts (§ 2513)

Rachel owns an insurance policy on the life of Albert with Belle as the designated beneficiary. Upon Rachel's prior death, nothing regarding this policy is included in her gross estate.

As a result of an auto accident from which she later died, Irene totaled a Bentley worth $95,000. If the insurance company covers $60,000 of the loss, Irene's estate can claim a casualty loss of $35,000 in arriving at the taxable estate.

Sam purchases a U.S. savings bond which he registers as follows: "Sam, payable to Don upon Sam's death." A gift occurs when Sam purchases the bond.

A Federal gift tax return does not have to be filed if no gift tax is payable.

Classify each statement appropriately. -Administration expenses attributable to handling the surviving spouse's share of the community property.

Classify each statement appearing below. -Darlene holds a special power of appointment over the income from a trust created by her brother. During the year, Darlene exercises the power in favor of one of the beneficiaries designated in the trust instrument.

Calvin's will passes $800,000 of cash to his widowed sister, Muriel. The estate tax attributable to the cash is $110,000. Muriel dies five years later, and the estate tax generated by the $800,000 is $100,000. How much of a credit for tax on prior transfers will Muriel's estate be allowed?

A surviving spouse's share of the community property is not included in the deceased spouse's gross estate.

An estate tax is a tax on the right of an heir to receive property on the death of the owner.

Mark dies on March 6, 2013. Which, if any, of the following items is not included in his gross estate?

Classify each statement appropriately. -Transportation cost for decedent and surviving son to site of burial.