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Exam 27: The Federal Gift and Estate Taxes

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Question 61

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Concerning the formula for the Federal estate tax:

A) The tax base results after any post-1976 taxable gifts are added to the taxable estate.
B) The taxable estate is determined with reduction for any state death taxes paid.
C) Any income tax owed by the decedent can be deducted in arriving at the taxable estate.
D) Some unified transfer tax credit is available even if it has been fully utilized for lifetime gifts.
E) All of the above.

F) None of the above
G) A) and B)

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Question 62

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A father wants to give a parcel of land to his two children.If he wants the survivor to have sole ownership,he should list ownership of the property as joint tenants.

A) True
B) False

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Question 63

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In 1998,Katelyn inherited considerable property when her father died.When Katelyn dies in 2009,her estate may be able to use § 2013 (credit for tax on prior transfers)as to some of the estate taxes paid by her father's estate.

At the time of her death,Stefanie held a promissory note from a loan she had made to her son.If Stefanie's will forgives the loan,nothing regarding the note is included in her gross estate.

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 $6 million estate between these two survivors.Both of these transfers are subject to the generation skipping transfer tax (GSTT).

Harry and Brenda are husband and wife.Using his funds,Harry purchases real estate which he lists as: "Harry and Brenda,tenants by the entirety with right of survivorship." If Harry dies first,only one-half of the value of the real estate will be included in his gross estate.

What is the justification for the terminable interest rule that is applicable to the marital deduction?

Becky made taxable gifts in 1974,1986,and 2009.In computing the gift tax on the 2009 gift,she must consider all of the prior taxable gifts.

At the time of his death on August 7,2009,Gordon owned the following assets. How much,as to these transactions,is included in Gordon's gross estate?

Peggy gives $200,000 to her grandson.This is an example of a direct skip for purposes of the GSTT (generation-skipping transfer tax).

The election of the alternate valuation date does not include any income earned by the property after the date the deceased owner died.

At the time of his death,Asa held a Roth IRA account with his wife as the designated beneficiary.As to the IRA,none of it is included in Asa's gross estate.

Sandy pays a local college for her non-dependent boyfriend's tuition.The payment is subject to the Federal gift tax.

Walt dies interstate (i.e. ,without a will)in the current year with a gross estate valued at $4,000,000.Under applicable state law,Walt's property passes to Kelly or to Belle,in that order.Kelly has an estimated net worth of $3,000,000 while Belle has none.From a tax planning standpoint,what course of action might be advisable.

Under the alternate valuation date election,each asset in the gross estate is valued at the lesser of the date of death value or six months thereafter.

In the case of a transfer by gift,a QTIP election causes the property to be subject to the estate tax upon the death of the donee spouse.

Gerald and Patricia are husband and wife and live in Oregon.In 1980 and using her funds,Patricia purchases a residence for $400,000,listing title to the property as "Gerald and Patricia,joint tenants with right of survivorship." In 2009,Gerald dies first when the residence is worth $2 million.A correct statement as to these transactions is:

The election of the alternate valuation date can affect the amount of a marital deduction allowed to an estate for a bequest to a surviving spouse.

In which,if any,of the following independent situations has Fred made a gift?

Alvin and Lindsay are husband and wife and have always lived in New York,a common law state.In 1990 and using separate funds,they bought an annuity from an insurance company-the purchase price was furnished 1/3 by Alvin and 2/3 by Lindsay.Under the terms of the contract,Alvin is to receive $40,000 per month for life when he reaches age 65.If Lindsay survives Alvin,she is to receive $25,000 per month for her life.Alvin dies first in 2009,at which time the value of Lindsay's survivorship annuity is $2,100,000.As to this annuity,how much (if any)is included in Alvin's gross estate?