Exam 13: The Estate Tax

Five years ago, George and Jerry (his brother) provide $40,000 and $60,000, respectively, to purchase realty titled in the names of George and Jerry as joint tenants with right of survivorship. George dies in the current year and is survived by Jerry. At the time of George's death, the realty is valued at $300,000. What is the value of the realty in George's gross estate?

Identify which of the following statements is true.

Mary creates and funds a revocable trust. Mary names her son to receive the income for life and her grandson to receive the property upon the son's death. What are Mary's powers with respect to the trust, and how will the trust be treated in her estate?

Identify which of the following statements is true.

Praneh Patel, a widower, died in March of the current year. His gross estate is $11,000,000, and at the time of his death, he owed debts of $40,000. His will made a charitable bequest of $280,000 and left the rest of his property to his children. His administrative expenses are estimated to be about $55,000. What tax issues should the estate's CPA consider when preparing Praneh's estate tax return and his estate's income tax return?

Identify which of the following statements is false.

Denise died April 1 and owned several bonds that paid interest March 31 and September 30. Also, she owned stock that paid dividends quarterly on March 31, June 30, September 30, and December 31. Denise's estate received the interest and dividends on the payment dates. What should be included in Denise's gross estate?

Dan transfers an apartment building to Grace but retains the right to the rental income for 10 years. Dan dies nine years after the transfer when the building is worth $600,000. The applicable federal rate is 10% and the reversionary actuarial factor is 0.30. How much would be included in Dan's estate?

Compare the credits available for estate tax purposes with the credits available for gift tax purposes. What differences exist?

Brent, who died on January 10, owned 10 shares of Potts Corporation stock. The closest trading dates to January 10 are January 8 (two working days before the date of death) and January 11 (one working day after the date of death). On January 8, the stock traded at a high of 101 and a low of 97, while on January 11, the high was 90 and the low was 86. The date- of- death per- share value is

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 false.

Identify which of the following statements is true.

The payment date for estate taxes may be extended by the IRS for all of the following reasons except

List the various categories of estate tax deductions, and compare them with the categories of gift tax deductions. What differences exist?

The gross- up rule requires

Ernie died this year. His will creates a $2,000,000 QTIP trust for his widow. Ernie's executor elects to claim the marital deduction for the QTIP transfer. At the time of the surviving spouse's death, the value of the QTIP trust is $3.6 million. The amount of the QTIP trust included in the surviving spouse's gross estate is

Which of the following credits is available for estate tax purposes?

The alternate valuation date is generally

Identify which of the following statements is true.