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Exam 27: Family Tax Planning

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Question 101

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Classify each statement appearing below. a.No taxable transfer occurs b.Gift tax applies c.Estate tax applies -​Under her father's will,Faith is to receive 10,000 shares of GE common stock.Eight months after her father's death,Faith disclaims the 10,000 shares.

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Question 102

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Sam purchases a U.S.savings bond which he registers as follows: "Sam,payable to Don upon Sam's death." A gift occurs when Sam purchases the bond.

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B) False

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Question 103

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At the time of her death,Megan was involved in the following. ∙ Owned an insurance policy on the life of her father with a replacement cost of $250,000 and maturity value of $800,000.The designated beneficiary of the policy is Megan's estate. ∙ Was an equal tenant in common with her brother in a tract of land worth $800,000.The land was inherited from their grandmother 10 years ago when it had a value of $200,000. ∙ Was a joint tenant with her two sisters in stock worth $1,500,000.The stock was inherited from their grandmother 10 years ago when it had a value of $500,000. As to these transactions,Megan's gross estate must include:

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. -Administration expenses attributable to handling the surviving spouse's share of the community property.

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

At the time of his prior death,Raul owned a residence with his wife,Manuela,as joint tenants.The residence was purchased by Manuela ten years ago at a cost of $300,000 and has a fair market value of $1.4 million.Raul's estate will be allowed no marital deduction as to the property.

Manuel,a citizen and resident of Argentina,makes a gift to his children of a ranch located in Colorado.Manuel will be subject to the U.S.gift tax.

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

Brad holds a life estate in a trust created by his father,while Scott holds a life estate in a trust created by himself.Upon their deaths,Scott must include the trust in his gross estate,while Brad need not include his trust.Why?

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.

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 2015,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

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

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.

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. -Mortgage on land included in gross estate and willed to decedent's children.

In community property states,not all property acquired after marriage by either spouse is community property.

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. -Transportation cost for decedent and surviving son to site of burial.

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

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.

Which of the following is not a characteristic of both the Federal gift tax and the Federal estate tax?

In determining whether a dividend issued on stock held by a decedent is included in the gross estate,the record date (rather than the declaration or payment dates) controls.