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Exam 27: The Federal Gift and Estate Taxes

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Question 41

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For both the Federal gift and estate tax, a deduction is allowed for certain transfers to a spouse.

A) True
B) False

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Question 42

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Concerning the Federal estate tax deduction for asset transfers to a surviving spouse:

A) The deduction is disallowed for transfers between same-sex spouses.
B) A deduction is allowed for a transfer to a member of a same-sex civil union.
C) A deduction is allowed for life insurance proceeds paid to a surviving spouse.
D) All of the above statements are true.

E) All of the above
F) A) and D)

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Question 43

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In 2018, grandparents contribute jointly owned funds to a § 529 qualified tuition plan on behalf of their granddaughter. The maximum annual exclusion allowed to them is $150,000 ($30,000 × 5 years).

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

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

Under certain circumstances, the gift-splitting election can be made even though the electing spouses no longer are married to each other.

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 candidate for the U.S. Congress.

For Federal estate tax purposes, the gross estate cannot include property the decedent does not own.

Classify each statement appearing below. a. No taxable transfer occurs b. Gift tax applies c. Estate tax applies -Using his own funds, Horace establishes a savings account designating ownership as follows: "Horace and Nadine as joint tenants with right of survivorship." Horace later withdraws all of the funds.

At the time of his death, Norton was involved in the following transactions. ? Owned land in joint tenancy with Emily. The land is worth $600,000 and was purchased by Norton 15 years ago for $150,000. ? Owned land in a tenancy by the entirety with his wife Amy. The land is worth $800,000 and was purchased by Norton five years ago for $450,000. ? Owned land in an equal tenancy in common with Noah. The land is worth $400,000 and was purchased by Norton four years ago for $300,000. ? Owned City of Dayton bonds worth $500,000. What amount is included in Norton's gross estate?

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

Concerning the election to split gifts, which of the following statements is incorrect?

A tenancy by the entirety is restricted in most states to having more than two joint owners.

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

On the date of her death, Ava owned the following. ? An insurance policy (face amount of $500,000) on the life of Benjamin (Ava's current husband) with herself as the designated beneficiary. The policy has a cash surrender value of $50,000. ? A life estate in a trust created by Alexander (Ava's deceased prior husband). The trust (current value of $2,900,000) was worth $1,000,000 when created ten years ago. A QTIP election was made by the executor of Alexander's estate. ? Federal income tax refund of $80,000 on a prior year's tax return and paid to the executor of Ava's estate. As to these items, how much is included in Ava's gross estate?

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.

The Federal transfer tax system includes three separate taxes.

Under his grandfather's will, Thad is entitled to receive shares of Kroger Corporation. For Federal transfer tax purposes, Thad is allowed to disclaim some of these shares and accept the others.

Waldo is his mother's sole heir and is the designated executor of her estate. Although the alternate valuation date would yield a smaller gross estate and less estate tax liability, the election is not made. Instead, Waldo files a Form 706 for his mother's estate using higher date of death values. Why?

Lila is the owner and beneficiary of a policy on the life of her husband, Austin. Upon Austin's death, the insurance proceeds paid to Lila do not qualify for the marital deduction.