Exam 13: The Estate Tax

Sasha gives $1,000,000 to her granddaughter. Sasha has used all of her unified credit and is in the 40% marginal gift tax bracket; ignore the annual exclusion and exemption. What is the amount of her tax on this transfer?

In 2018, the basic exclusion amount for an estate tax return is $10,000,000 before taking into account necessary inflation adjustments.

An executor can value each asset in an estate at the lower of its FMV at death or the alternate valuation date.

Administrative expenses are not deductible on the estate's income tax return.

On March 1, Bart transfers ownership of a $700,000 life insurance policy on his life that he purchased in 2015. How long must Bart live to avoid inclusion of the $700,000 death benefit in his estate?

In 2001, Alejandro buys an annuity for $100,000 that will pay Alejandro an annual amount for life with survivor benefits to his wife. When Alejandro dies in the current year, a comparable contract would have cost $81,000. What amount is included in Alejandro's gross estate?

On March 1, Sue transfers stock worth $20,000 to Frank. How long must Sue live to avoid inclusion of the $20,000 of stock in her gross estate?

In 2002, Gert made a $5,000,000 taxable gift. The 2002 gift tax on $5,000,000 was $2,275.800. Gert was entitled to a unified credit of $345,800, resulting in a gift tax of $1,193,000. The marginal tax rate in 2002 is 50%. Assume Gert dies in 2013 when the credit is $2,045.800 and the marginal rate is 40%, the tax on $5,000,000 would equal $1,945,800 before subtracting any credit. In arriving at Gert's estate tax liability, what is the amount subtracted for 1992 gift taxes paid?

Two years ago, Nils transfers a $200,000 life insurance policy on his life to his daughter, Gail. The policy is worth $60,000 at the time of transfer and Gail pays Nils $50,000. When Nils dies this year, the $50,000 cash is still in a savings account. The consideration offset when computing Nils's gross estate is

Identify which of the following statements is true.

Joe dies late in 2015 and his estate is subject to an estate tax of $2 million. He leaves all of his assets to his daughter, Claudia. Claudia dies in early 2017. Which of the following statements is correct?

Identify which of the following statements is true.

The probate estate includes property that passes by will or an intestacy statute and does not include property that passes due to a beneficiary designation.

Mr. Howell died this year. He willed a copyright with a 10- year remaining life to Mrs. Howell. His will also sets up a trust for the benefit of Mrs. Howell whom he entitles to receive all of the income semiannually until the earlier of her remarriage or her death. Upon her remarriage or death, the trust property is to be distributed to their children. Do the copyright and trust transfers qualify for the marital deduction? Explain.

Identify which of the following statements is true.

A stock redemption to pay death taxes under Sec. 303 is generally treated as

The alternate valuation date can be elected for estate tax purposes only if the election

Reversionary interests in publicly traded stocks included in a gross estate must be valued

Ray died on March 4. His estate includes some stock and a parcel of land. The stock is still owned by the estate on September 4, but the land is sold on August 30. If Ray's executor elects the alternate valuation date, what values would be used for estate tax purposes for the stock and the land?

Four years ago, David gave land to Mike that he purchased for $70,000, which is presently worth $100,000. Three years ago, Mike exchanged the land (then worth $150,000) along with a $100,000 cash contribution made by David for a new piece of land worth $250,000. The new land is titled with David and Mike as joint tenants with the right of survivorship. When Mike dies this year, the land is worth $300,000. Mike's estate will include