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Exam 18: The Federal Gift and Estate Taxes

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Question 71

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Which,if any,of the following is a correct statement regarding the filing of a gift tax return (Form 709) ?

A) A donor must file a Form 709 in the same year in which the gift was made.
B) The due date of a Form 709 is the same as the due date of the donor's Form 1040.
C) A Form 709 may have to be filed even though the value of the gift was less than the amount of the annual exclusion.
D) Melody gives her husband a new Mercedes convertible for his birthday.Melody must file a Form 709 to report the gift even though no gift tax results.
E) None of the above.

F) C) and D)
G) D) and E)

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Question 72

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Bernard's will passes $800,000 of cash to his widowed sister,Marie.The estate tax attributable to the cash is $120,000.Marie dies five years later,and the estate tax generated by the $800,000 is $140,000.How much of a credit for tax on prior transfers will Marie's estate be allowed?

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$72,000.60...

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Question 73

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At the time of Cal's death in 2009,part of his estate consists of the following. Under Cal's will,all of his property passes to his wife,Kim.How much marital deduction is Cal's estate allowed?

In 2000,Irv creates a revocable trust,income payable to his children for life,remainder to his grandchildren.In 2008,Irv relinquishes the power to revoke the trust.If Irv dies in 2009,the trust is not included in his gross estate.

A lifetime transfer that is supported by full and adequate consideration is not a gift.

Death does not defeat a deceased spouse's interest in community property.

At the time of her death,Abigail held a general power of appointment over a trust created by her grandmother in 1980.Since Abigail never exercised the general power,none of the trust is included in her gross estate.

Which,if any,of the following is not a characteristic of the Federal estate tax?

Walt dies intestate (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.

In arriving at the taxable estate,expenses incurred in administering community property are deductible only in proportion to the deceased spouse's interest in the community.

A transfer in trust in which the trustee has the power to accumulate income is a gift of a future interest even if the trustee never exercises the power.

If a donor has a fiscal year of July 1-June 30 for income tax purposes,this does not change the normal filing date for Form 709.

Joint tenancies and tenancies by the entirety avoid probate,while tenancies in common and community property do not.Why?

Although qualified tuition plans under § 529 are treated favorably for gift tax purposes,such plans are subject to estate tax consequences upon the grantor's death.

Regarding the power of appointment estate and gift tax rules,which of the following statements is correct?

For gift tax purposes,a property settlement in consideration of marriage (i.e. ,prenuptial agreement)is treated the same as a property settlement incident to a divorce.

Ginger dies on April 30,2009.Which,if any,of the following items is included in her gross estate?

Prior to his death in 2009,Cameron made the following taxable gifts. The policy of Cameron's life was given to the designated beneficiary.The gift of the stock and the land generated gift taxes of $28,750 and $64,250,respectively. As to these transfers,how much is included in Cameron's gross estate?

For Federal estate tax purposes,the gross estate does not include property that will pass to a surviving spouse.

Which,if any,of the following statements correctly reflects the rules applicable to the alternate valuation date ?