Exam 18: The Federal Gift and Estate Taxes

Lyle and Kelly are brother and sister. Using his funds, Lyle purchases land, listing title as: "Lyle and Kelly, joint tenants with right of survivorship." If Kelly dies first, none of the land is included in her gross estate.

Mark dies on March 6, 2015. Which, if any, of the following items is not included in his gross estate?

Ben and Lynn are married and have four pre-teen grandchildren. They want to contribute to a § 529 plan on behalf of their education. For 2015, what is the maximum amount they can transfer to the plan without making a taxable gift?

Classify each statement appearing below -Using his own funds, Horace establishes a savings account designating ownership as follows: "Horace and Nadine as joint tenants with right of survivorship." Horace predeceases Nadine.

On the date of her death, Ava owned the following: ∙ An insurance policy (face amount of $500,000) on the life of Benjamin (Ava's current husband) with herself as the designated beneficiary. The policy has a cash surrender value of $50,000. ∙ A life estate in a trust created by Alexander (Ava's deceased prior husband). The trust (current value of $2,900,000) was worth $1,000,000 when created ten years ago. A QTIP election was made by the executor of Alexander's estate. ∙ Federal income tax refund of $80,000 on a prior year's tax return and paid to the executor of Ava's estate. As to these items, how much is included in Ava's gross estate?

At the time of her death, Rita held a promissory note from a loan she had made to her son. If Rita's will forgives the loan, the note is not included in her gross estate.

Daniel's will provides that all of his property passes to a trust, life estate to his wife, remainder to charity. If Daniel's executor does not make a QTIP election, the use of the marital deduction date is not possible.

Classify each statement appearing below -​Under her father's will, Faith is to receive 10,000 shares of GE common stock. Ten months after her father's death, Faith disclaims 10,000 shares.

All of the charitable organizations that qualify for estate tax purposes also qualify for income tax purposes.

A marital deduction is not allowed if the surviving spouse is a nonresident alien.

To avoid the terminable interest limitation on the marital deduction, the surviving spouse must be granted a general power of appointment over the trust property, or a QTIP election must be made.

Sometimes also known as transaction taxes, Federal gift and estate taxes are excise taxes.

Match each statement with the correct choice. Some choices may be used more than once or not at all -Tenancy by the entirety

Classify each statement appearing below -Meg gives her 18-year-old son money for his college tuition and living expenses (e.g., room and board).

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.

Stacey inherits unimproved land (fair market value of $6 million) from her father on June 1, 2014. Stacey disclaims her interest in the property as follows: one-third on December 1, 2014; one-third on January 3, 2015; and the remaining one-third on May 31, 2015. In all cases, the disclaimers pass the interest to her son (the next heir under state law). The Federal gift tax applies to Stacey for:

At the time of his death in 2015, Leroy owed Federal income taxes on income earned in 2013. Leroy's estate can claim an estate tax deduction for the income tax it pays.

Ray purchases U.S. savings bonds which he lists as "Ray and Donna" as co-owners. Donna is Ray's daughter. Donna predeceases Ray. No gift or estate tax consequences result from this situation.

Under certain circumstances, the gift-splitting election can be made even though the electing spouses are no longer married to each other.

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