FiltersDone

Question type

Essay

Multiple Choice

Short Answer

True False

Matching

Exam 18: The Federal Gift and Estate Taxes

Show Answer

Share

---

All types

Filters

Study Flashcards

Question 61

Short Answer

Review LaterAdd Note

Review Later

Classify each statement appropriately. a. Deductible from the gross estate in arriving at the taxable estate. b. Not deductible from the gross estate in arriving at the taxable estate. -Casualty loss to property before the death of the owner.

Correct Answer

verified

Show Answer

Question 62

Essay

Review LaterAdd Note

Review Later

At the time of her death, Audrey was (or had been) involved in the following trust arrangements. As to these trusts, how much is included in Audrey's gross estate? -Trust A. Created by Audrey ten years ago as a revocable trust with $1 million in assets. The trust provides for a life estate to Audrey, remainder to her children. Two years ago and when the trust was worth $5 million, Audrey released her power to revoke. When Audrey died, Trust A's assets are valued at $5.1 million. -Trust B. Created by David's will (Audrey's late husband) and provides for a life estate to Audrey, remainder to her children. David's estate made a QTIP election. Trust B was worth $2 million when created and $3 million when Audrey died. -Trust C. Created by Audrey five years ago, provides for a life estate to Audrey's children, remainder to their children (i.e., Audrey's grandchildren). Trust C was worth $1.5 million when created and $2.4 million when Audrey died.

Correct Answer

verified

$8,100,000. Trust A is included under §§...

View Answer

Show Answer

Question 63

True/False

Review LaterAdd Note

Georgia owns an insurance policy on the life of Jake, with Scarlet as the designated beneficiary. Upon Scarlet's prior death, no transfer tax consequences result.

In contrasting the computation of the Federal gift and estate taxes, are past taxable gifts handled in the same fashion? Explain.

Classify each statement appearing below. a. No taxable transfer occurs b. Gift tax applies c. Estate tax applies -Howard establishes a trust, life estate to his children, remainder to the grandchildren. Under its terms, the trust is revocable by Howard.

Classify each of the independent statements appearing below. a. Some or all of the interest included in the decedent's gross estate. b. None of the interest included in the decedent's gross estate. -Cash dividends on stock owned by the decedent (declaration and record dates preceded death but payment date was after death).

All of the charitable organizations that qualify for estate tax purposes also qualify for income tax purposes.

In 2005, Noah and Kelly acquire real estate for $2,000,000, with Noah furnishing $400,000 of the purchase price and Kelly providing the balance. Title to the property is listed as: "Noah and Kelly, equal tenants in common." Noah dies first in 2013, when the real estate is worth $4,000,000. a. Were there any tax consequences in 2005? Explain. a. and b. How much, as to the real estate, is included in Noah's gross estate? b., would it make any difference whether Noah and Kelly are brother and sister or husband and wife? c. As to parts

The Federal gift and estate taxes were restructured in 1976 into the unified transfer tax. The objective of the change was to eliminate the tax difference between transfers during life (gift tax) and at death (estate tax). Does this uniformity of treatment currently exist? In this regard, comment on the following differences between the two taxes. a. Applicable unified transfer tax credit. b. Applicable unified transfer tax rates. c. Availability of the charitable and marital deductions. d. Availability of the annual exclusion.

Classify each statement appearing below. a. No taxable transfer occurs b. Gift tax applies c. Estate tax applies -Cash donation to the reelection campaign of a member of the U.S. Congress.

At the time of her death on June 6, Mary owned the following assets. -Taupe Corporation stock (cost $400,000, FMV $800,000). On May 4, Taupe declared a cash dividend, payable on June 15, to shareholders as of the record date of June 4. Mary's executor received the $40,000 dividend on the scheduled payment date. -City of Boise bonds (cost $800,000, FMV $780,000). Interest accrued to June 6 was $42,000. The executor eventually collected $50,000 (included post-death accrual of $8,000) on July 20. As to these transactions, how much is included in Mary's gross estate?

At the time of her death in an automobile accident, Laura left a modest probate estate, most of which she had inherited from her mother several years ago. Comment on Laura's Federal estate tax position in connection with each of the following points. a. Probate estate versus gross estate. b. Credit for the tax on prior transfers.

Murray owns an insurance policy on the life of his father, Logan. Upon Logan's death, the policy proceeds of $2,000,000 are paid to the designated beneficiary, Grace. What are the transfer tax consequences resulting from Logan's death, based on the following independent assumptions? a. Grace is Murray's daughter. b. Grace is Murray's wife. c. What are the tax consequences if Murray dies first (i.e., predeceases both Grace and Logan)?

At the time of his death, Lance held a life estate in the LM Trust. Under which of the following circumstances will the LM Trust not be included in his gross estate?

Match each statement with the correct choice. Some choices may be used more than once or not at all. 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. -QTIP election

Match each statement with the correct choice. Some choices may be used more than once or not at all. 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. -Tenancy in common

The election of the alternate valuation date can affect the amount of a charitable deduction allowed to an estate for a bequest to a qualified charity.

At the time of her death, Sophia was a participant in her employer's qualified pension plan. Her accrued balance in plan is: Employer's contribution $1,300,000 Sophia's contribution 800,000 Income earned by plan 900,000 Sophia also was covered by her employer's group term life insurance program. Her policy (maturity value of $100,000 made payable to Aiden (Sophia's husband). Aiden is also the designated beneficiary of the pension plan. a. Regarding these assets, how much is included in Sophia's gross estate? b. In Sophia's taxable estate? c. How much gross income must Aiden recognize, when collecting on these items?

In 2002, Katelyn inherited considerable property when her father died. When Katelyn dies in 2013, 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.

In determining the Federal gift tax on a current gift: