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Exam 27: The Federal Gift and Estate Taxes

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Question 41

Multiple Choice

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Classify each of the following independent statements:. -Interest on municipal bonds accrued after death.

A) Some or all of the asset is included in the decedent’s gross estate.
B) None of the asset is included in the decedent’s gross estate.

C) A) and B)
D) undefined

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Question 42

True/False

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Transfers to political organizations are exempt from the application of the Federal gift tax.

A) True
B) False

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Question 43

Multiple Choice

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

Ling and Jiang are unrelated and equal joint tenants in a plot of land. Ling died this year. Ling's share of the land goes to:

Sidney dies and leaves property to his sister Giselle. Thirteen months later, Giselle dies. Giselle's estate can claim a full credit for any Federal estate taxes paid by Sidney's estate as to amounts passing to Giselle.

Ben and Lynn are married and have four preteen grandchildren. They want to contribute to a § 529 plan on behalf of their education. For 2019, what is the maximum amount they can transfer to the plan without making a taxable gift?

At the time of his death, Tom owned some common stock. $\begin{array}{lcc} &\text {Date of }\\&\text {Death }&\text { Value Six}\\& \text { Value } & \text { Months Later } \\\text { Citron Corporation } & \$ 1,500,000 & \$ 1,100,000 \\\text { Grey Corporation } & 1,300,000 & 1,400,000\end{array}$ If the alternate valuation date is properly elected, the value of Tom's estate as to these stocks is:

Some states impose inheritance taxes, but the Federal tax system does not.

Classify each of the following statements. -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.

Classify each of the following statements. -Howard establishes a trust, life estate to his children and remainder to the grandchildren. Under its terms, the trust is revocable by Howard.

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

Concerning the Federal tax on generation-skipping transfers:

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

Mitch pays the surgeon and the hospital for his aunt's heart bypass operation. The transfer is not subject to the gift tax.

Classify each of the following independent statements:. -Decedent owned a policy on the life of his spouse with himself as the designated beneficiary. The spouse survives.

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.

Homer and Laura were husband and wife. At the time of Homer's death, they owned the following: land as tenants by the entirety worth $2,000,000 (purchased by Homer) and stock as equal tenants in common worth $3,000,000 (purchased by Laura) . Homer owned an insurance policy on his life (maturity value of $1,000,000) with Laura as the designated beneficiary. Homer's will passes all his property to Laura. How much marital deduction is allowed Homer's estate?

In which of the following independent situations has Jean made a gift?

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 10 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?

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