Exam 13: The Estate Tax

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?

Explain why living trusts are popular tax- planning vehicles.

Identify which of the following statements is true.

Listed stocks are valued at their closing price on the date of death.

Compare the tax treatment of administration expenses with that of the decedent's debts.

Yoyo Corporation maintains a retirement plan for its employees to which it makes 70% of the contributions and the employees make 30%. Gary dies this year and is employed at the time of his death. Gary's spouse will receive an annuity valued at $600,000 from the retirement plan. How much of the annuity will be included in Gary's gross estate?

Michael Moriarty, a widower, is quite elderly and is beginning to do some estate planning. His goal is to reduce his transfer taxes. He is considering purchasing land with a high potential for appreciation and owning it with his grandson as joint tenants with rights of survivorship. Michael would provide all of the consideration, estimated to be about 11.5 million. What tax issues should Michael Moriarty consider with respect to the purchase of the land?

The following items were discovered in reviewing materials for John's estate tax return: (1) Two years ago, John sold stock to his son, Patrick, for $30,000. At the date of sale, the stock had a value of $6 The value of the stocks at John's death was $90,000. (2) John owned a beach house, worth $500,000, with his sister, Amber, who paid for it. (3) John's home was held in a tenancy by the entirety with his wife, Julia. Julia paid for the house, which had a v $300,000 on the date of his death. (4) John's clothing and other personal belongings are worth $3,700 on the date of his death. What amount is included in John's estate?

Yee made $3 million of taxable gifts in 1993 and paid gift taxes (less the unified credit) of $1,098,000. Yee died with a taxable estate of $10,000,000. At current rates, the gift taxes payable on $3 million would be $1,145,800. Yee died in a year when the unified credit was $2,045,800. Determine her estate tax liability.

Discuss the transferor provisions relating to the estate tax, and provide three examples of transactions governed by the transferor provisions.

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

The estate tax return is due, ignoring extensions, 3- 1/2 months after the decedent's date of death.

Identify which of the following statements is true.

Identify which of the following statements is true.

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?

Martin transfers stock to an irrevocable trust and names himself to receive the trust income for life with the remainder interest gifted to his son. When Martin dies,

Identify which of the following statements is false.

Identify which of the following statements is true.

An executor may elect to postpone payment of the estate tax attributable to a remainder or reversionary interest until 6 months after the interests of the other person(s) terminate.

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.