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Exam 18: The Federal Gift and Estate Taxes

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Question 1

Multiple Choice

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In determining the Federal gift tax on a current gift:

A) Disregard taxable gifts made after 1976.
B) Disregard taxable gifts made before 1977.
C) Include all prior gifts.
D) Claim a credit only for the gift taxes actually paid.
E) None of the above.

F) A) and B)
G) C) and E)

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E

Question 2

Multiple Choice

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Homer and Laura are husband and wife.At the time of Homer's prior death in 2009,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) .Laura also owns an insurance policy on Homer's life (maturity value of $1,000,000) with herself as the designated beneficiary.Homer's will passes all his property to Laura.How much marital deduction is allowed Homer's estate?

A) $2,000,000.
B) $2,500,000.
C) $3,500,000.
D) $4,500,000.
E) None of the above.

F) A) and B)
G) A) and E)

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Question 3

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A timely issued disclaimer by an heir transfers the property to someone else without a Federal gift tax result.

If interest is provided for in loans between related parties,there is no imputed interest,as a gift loan does not result.

In 2008 and with $100,000,Ronald establishes a joint savings account with his cousin,Allison.In 2009,Allison withdraws the $100,000 and disappears.Ronald made a gift to Allison in 2009.

An estate tax is a tax on the right of an heir to receive property on the death of the owner.

In a § 2503(c)trust for minors,the trustee can be given the power to accumulate income without the gift violating the future interest rule.

The current top Federal transfer tax rate of 45% is the highest that the rate ever has been.

The election of the alternate valuation date can affect the amount of a marital deduction allowed to an estate for a bequest to a surviving spouse.

At the time of her death on June 4,2009,Ava owned the following assets. As to these transactions,how much is included in Ava's gross estate?

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.

Matt and Hillary are husband and wife and live in Pennsylvania.Using joint funds,in 1990 they purchase an insurance policy on Matt's life and designate their daughter,Sandra,as the beneficiary.The policy has a maturity value of $2,000,000.Matt dies first in 2009 and the insurance proceeds are paid to Sandra.As to the proceeds:

For Federal estate tax purposes,the gross estate includes property that the decedent owns at the time of death.It may also include property that the decedent no longer owns.Explain.

The deemed paid credit allowed for past taxable gifts can be more than the tax actually paid.

In 1980,Marie and Hal (mother and son) purchased land for $600,000 as joint tenants with right of survivorship.Of the $600,000 purchase price,Marie provided $400,000 and Hal $200,000 (of which $100,000 had been received as a gift from Marie) .In 2009,Hal dies first when the land is worth $3,000,000.As to the land,Hal's gross estate must include:

Becky made taxable gifts in 1974,1986,and 2009.In computing the gift tax on the 2009 gift,she must consider all of the prior taxable gifts.

A father wants to give a parcel of land to his two children.If he wants the survivor to have sole ownership,he should list ownership of the property as joint tenants.

In what manner does the tax law favor contributions to qualified tuition plans under § 529?

Harry and Brenda are husband and wife.Using his funds,Harry purchases real estate which he lists as: "Harry and Brenda,tenants by the entirety with right of survivorship." If Harry dies first,only one-half of the value of the real estate will be included in his gross estate.

At the time of her death in 2009,Emma still owed $36,000 on her church pledge for the year.If church pledges are not an enforceable obligation in the state where Emma resided,her estate cannot claim a deduction for the $36,000 it later pays.