Question 1

Paul, a U.S. citizen, will avoid the Federal estate tax if he becomes a Canadian resident and owns no property located in the U.S. at the time of his death.

Accepted Answer

A) True 
 B)False

Question 2

Peggy gives $200,000 to her grandson. This is an example of a direct skip for purposes of the GSTT (generation-skipping transfer tax).

Accepted Answer

A) True 
 B)False

Question 3

Classify each statement appearing below
-Howard establishes a trust, life estate to his children, remainder to the grandchildren. Under its terms, the trust is revocable by Howard.

Accepted Answer

A) No taxable transfer occurs 
B) Gift tax applies 
C) Estate tax applies 
A) No taxable transfer occurs 
B) Gift tax applies 
C) Estate tax applies

Question 4

Frank owns an insurance policy on the life of Cynthia, with Leon as the designated beneficiary. Upon Cynthia's prior death, Frank is treated as making a gift of the insurance proceeds to Leon.

Accepted Answer

A) True 
 B)False

Question 5

At the time of his death, Lance held a life estate in the LM Trust. Under which of the following circumstances will the LM Trust not be included in his gross estate?

Accepted Answer

A)  The trust was created by Lance and was revocable. He released the power to revoke four years before his death. 
B)  The trust was created by Lance and is irrevocable. 
C)  The trust was created by Lance's father. 
D)  The trust was created by Lance's deceased wife and the executor of her estate made a QTIP election. 
E)  None of the above. 
A)  The trust was created by Lance and was revocable. He released the power to revoke four years before his death. 
B)  The trust was created by Lance and is irrevocable. 
C)  The trust was created by Lance's father. 
D)  The trust was created by Lance's deceased wife and the executor of her estate made a QTIP election. 
E)  None of the above.

Question 6

Classify each of the independent statements appearing below
-Proceeds of an insurance policy on decedent's life. Decedent's son purchased the policy and is its owner and beneficiary.

Accepted Answer

A) Some or all of the interest included in the decedent's gross estate. 
B) None of the interest included in the decedent's gross estate. 
A) Some or all of the interest included in the decedent's gross estate. 
B) None of the interest included in the decedent's gross estate.

Question 7

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

Accepted Answer

A) In the current year, Debby, a widow, dies. Two years ago she inherited a large amount of wealth from her brother. 
B) Death does not defeat an owner's interest in property. 
C) Exists only if husband and wife are involved. 
D) A type of state tax on transfers by death. 
E) Must decrease the amount of the gross estate.
F)Annual exclusion not allowed.
G)Cumulative in effect.
H)Right of survivorship present as to type of ownership.
I)Avoids the terminable interest rule of the marital deduction.
J)Exemption equivalent.
K)Bypass amount.
L)No correct match provided. 
A) In the current year, Debby, a widow, dies. Two years ago she inherited a large amount of wealth from her brother. 
B) Death does not defeat an owner's interest in property. 
C) Exists only if husband and wife are involved. 
D) A type of state tax on transfers by death. 
E) Must decrease the amount of the gross estate.
F)Annual exclusion not allowed.
G)Cumulative in effect.
H)Right of survivorship present as to type of ownership.
I)Avoids the terminable interest rule of the marital deduction.
J)Exemption equivalent.
K)Bypass amount.
L)No correct match provided.

Question 8

Pauline sells antique furniture to her daughter, Nicole, for $10,000. If the furniture is really worth $100,000, Pauline has made a gift to Nicole of $100,000.

Accepted Answer

A) True 
 B)False

Question 9

For Federal estate tax purposes, the gross estate does not include property that will pass to a surviving spouse.

Accepted Answer

A) True 
 B)False

Question 10

Manfredo makes a donation of $50,000 to the church where he was baptized in Mexico City. The gift does not qualify as a charitable contribution for Federal income tax purposes.

Accepted Answer

A) True 
 B)False

Question 11

In contrasting the computation of the Federal gift and estate taxes, are past taxable gifts handled in the same fashion? Explain.

Accepted Answer

In determining the gift tax ba

Question 12

At the time of his death, Norton was involved in the following transactions.
∙
Owned land in joint tenancy with Emily. The land is worth $600,000 and was purchased by Norton 15 years ago for $150,000.
∙
Owned land in a tenancy by the entirety with Amy. The land is worth $800,000 and was purchased by Norton five years ago for $450,000.
∙
Owned land in an equal tenancy in common with Noah. The land is worth $400,000 and was purchased by Norton four years ago for $300,000.
∙
Owned City of Dayton bonds worth $500,000.
​
What amount is included in Norton's gross estate?

Accepted Answer

A)  $900,000 
B)  $1,100,000 
C)  $1,700,000 
D)  $2,100,000 
E)  None of the above. 
A)  $900,000 
B)  $1,100,000 
C)  $1,700,000 
D)  $2,100,000 
E)  None of the above.

Question 13

Homer and Laura are husband and wife. At the time of Homer's prior death in 2015, 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). Homer owns an insurance policy on his life (maturity value of $1,000,000) with Laura as the designated beneficiary. Homer's will passes all his property to Laura. How much marital deduction is allowed Homer's estate?

Accepted Answer

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

Question 14

At the time of her death, Emma still owed $36,000 on her church pledge for the year. Because 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.

Accepted Answer

A) True 
 B)False

Question 15

Which, if any, of the following is not a characteristic of the Federal estate tax?

Accepted Answer

A)  A foreign tax credit is available. 
B)  A credit for tax on prior transfers may be available. 
C)  Post-1976 taxable gifts need to be considered. 
D)  A charitable deduction is available. 
E)  None of the above. 
A)  A foreign tax credit is available. 
B)  A credit for tax on prior transfers may be available. 
C)  Post-1976 taxable gifts need to be considered. 
D)  A charitable deduction is available. 
E)  None of the above.

Question 16

Matt and Patricia are husband and wife and live in Oregon. In 1980 and using her funds, Patricia purchases a residence for $400,000, listing title to the property as "Matt and Patricia, joint tenants with right of survivorship." In 2015, Matt dies first when the residence is worth $2 million. A correct statement as to these transactions is:

Accepted Answer

A)  In 2015, Matt's gross estate includes $1 million and a marital deduction of $1 million is allowed for estate tax purposes. 
B)  In 1980, Patricia made a gift to Matt but no marital deduction is available for gift tax purposes. 
C)  In 1980, Patricia did not make a gift to Matt. 
D)  In 2015, Matt's estate includes nothing as to the property. 
E)  None of the above. 
A)  In 2015, Matt's gross estate includes $1 million and a marital deduction of $1 million is allowed for estate tax purposes. 
B)  In 1980, Patricia made a gift to Matt but no marital deduction is available for gift tax purposes. 
C)  In 1980, Patricia did not make a gift to Matt. 
D)  In 2015, Matt's estate includes nothing as to the property. 
E)  None of the above.

Question 17

For Federal estate tax purposes, the gross estate cannot include property the decedent no longer owns.

Accepted Answer

A) True 
 B)False

Question 18

In most cases, the gross estate of a decedent is larger than the probate estate.

Accepted Answer

A) True 
 B)False

Question 19

Classify each statement appropriately
-Mortgage on land included in gross estate and willed to decedent's children.

Accepted Answer

A) Deductible from the gross estate in arriving at the taxable estate. 
B) Not deductible from the gross estate in arriving at the taxable estate. 
A) Deductible from the gross estate in arriving at the taxable estate. 
B) Not deductible from the gross estate in arriving at the taxable estate.

Question 20

The § 2513 election to split gifts is less useful in community property states than in common law states. Explain.

Accepted Answer

In community property jurisdictions,The

Paul, a U.S. citizen, will avoid the Federal estate tax if he becomes a Canadian resident and owns no property located in the U.S. at the time of his death.

Peggy gives $200,000 to her grandson. This is an example of a direct skip for purposes of the GSTT (generation-skipping transfer tax).

Classify each statement appearing below -Howard establishes a trust, life estate to his children, remainder to the grandchildren. Under its terms, the trust is revocable by Howard.

Frank owns an insurance policy on the life of Cynthia, with Leon as the designated beneficiary. Upon Cynthia's prior death, Frank is treated as making a gift of the insurance proceeds to Leon.

At the time of his death, Lance held a life estate in the LM Trust. Under which of the following circumstances will the LM Trust not be included in his gross estate?

Classify each of the independent statements appearing below -Proceeds of an insurance policy on decedent's life. Decedent's son purchased the policy and is its owner and beneficiary.

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

Pauline sells antique furniture to her daughter, Nicole, for $10,000. If the furniture is really worth $100,000, Pauline has made a gift to Nicole of $100,000.

For Federal estate tax purposes, the gross estate does not include property that will pass to a surviving spouse.

Manfredo makes a donation of $50,000 to the church where he was baptized in Mexico City. The gift does not qualify as a charitable contribution for Federal income tax purposes.

In contrasting the computation of the Federal gift and estate taxes, are past taxable gifts handled in the same fashion? Explain.

At the time of her death, Emma still owed $36,000 on her church pledge for the year. Because 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.

Which, if any, of the following is not a characteristic of the Federal estate tax?

For Federal estate tax purposes, the gross estate cannot include property the decedent no longer owns.

In most cases, the gross estate of a decedent is larger than the probate estate.

Classify each statement appropriately -Mortgage on land included in gross estate and willed to decedent's children.

The § 2513 election to split gifts is less useful in community property states than in common law states. Explain.

Understanding and Working With the Federal Tax Law

Corporations: Introduction and Operating Rules

Corporations: Special Situations

Corporations: Organization and Capital Structure

Corporations: Earnings Profits and Dividend Distributions

Corporations: Redemptions and Liquidations

Corporations: Reorganizations

Consolidated Tax Returns

Taxation of International Transactions

Partnerships: Formation, Operation, and Basis

Partnerships: Distributions, Transfer of Interests, and Terminations

S Corporations

Comparative Forms of Doing Business

Taxes on the Financial Statements

Exempt Entities

Multistate Corporate Taxation

Tax Practice and Ethics

Family Tax Planning

Income Taxation of Trusts and Estates

Filters

Exam 18: The Federal Gift and Estate Taxes

Paul, a U.S. citizen, will avoid the Federal estate tax if he becomes a Canadian resident and owns no property located in the U.S. at the time of his death.

Peggy gives $200,000 to her grandson. This is an example of a direct skip for purposes of the GSTT (generation-skipping transfer tax).

Classify each statement appearing below -Howard establishes a trust, life estate to his children, remainder to the grandchildren. Under its terms, the trust is revocable by Howard.

Frank owns an insurance policy on the life of Cynthia, with Leon as the designated beneficiary. Upon Cynthia's prior death, Frank is treated as making a gift of the insurance proceeds to Leon.

At the time of his death, Lance held a life estate in the LM Trust. Under which of the following circumstances will the LM Trust not be included in his gross estate?

Classify each of the independent statements appearing below -Proceeds of an insurance policy on decedent's life. Decedent's son purchased the policy and is its owner and beneficiary.

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

Pauline sells antique furniture to her daughter, Nicole, for $10,000. If the furniture is really worth $100,000, Pauline has made a gift to Nicole of $100,000.

For Federal estate tax purposes, the gross estate does not include property that will pass to a surviving spouse.

Manfredo makes a donation of $50,000 to the church where he was baptized in Mexico City. The gift does not qualify as a charitable contribution for Federal income tax purposes.

In contrasting the computation of the Federal gift and estate taxes, are past taxable gifts handled in the same fashion? Explain.

At the time of her death, Emma still owed $36,000 on her church pledge for the year. Because 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.

Which, if any, of the following is not a characteristic of the Federal estate tax?

For Federal estate tax purposes, the gross estate cannot include property the decedent no longer owns.

In most cases, the gross estate of a decedent is larger than the probate estate.

Classify each statement appropriately -Mortgage on land included in gross estate and willed to decedent's children.

The § 2513 election to split gifts is less useful in community property states than in common law states. Explain.

Understanding and Working With the Federal Tax Law

Corporations: Introduction and Operating Rules

Corporations: Special Situations

Corporations: Organization and Capital Structure

Corporations: Earnings Profits and Dividend Distributions

Corporations: Redemptions and Liquidations

Corporations: Reorganizations

Consolidated Tax Returns

Taxation of International Transactions

Partnerships: Formation, Operation, and Basis

Partnerships: Distributions, Transfer of Interests, and Terminations

S Corporations

Comparative Forms of Doing Business

Taxes on the Financial Statements

Exempt Entities

Multistate Corporate Taxation

Tax Practice and Ethics

Family Tax Planning

Income Taxation of Trusts and Estates

Filters