Exam 18: The Federal Gift and Estate Taxes

Classify each statement appropriately -Payment of unpaid gift taxes.

Classify each of the independent statements appearing below -Cash dividends on stock owned by the decedent (declaration and record dates preceded death but payment date was after death).

At the time of her death on June 6, Mary owned the following assets. ∙ Taupe Corporation stock (cost $400,000, FMV $800,000). On May 4, Taupe declared a cash dividend, payable on June 15, to shareholders as of the record date of June 4. Mary's executor received the $40,000 dividend on the scheduled payment date. ∙ City of Boise bonds (cost $800,000, FMV $780,000). Interest accrued to June 6 was $42,000. The executor eventually collected $50,000 (included post-death accrual of $8,000) on July 20. As to these transactions, how much is included in Mary's gross estate?

At the time of her death on October 4, 2015, Kaitlyn was involved in the following transactions. ∙ Was the sole life beneficiary of a trust (assets worth $2 million) created 10 years ago by Paul (Kaitlyn's husband). The transfer was by gift of securities then worth $500,000 (Paul did not make a QTIP election). Paul and Kaitlyn's children are the remainder persons. ∙ Owned stock in Mauve Corporation (basis of $800,000 and fair market value of $1 million). On September 7, 2015, a dividend of $48,000 was declared on the stock payable to all shareholders on record as of October 3, 2015. The $48,000 was received by Kaitlyn's executor on October 19, 2015. ∙ Kaitlyn made a taxable gift of $400,000 in 2004. As to these transactions, Kaitlyn's gross estate includes:

Classify each of the independent statements appearing below -Bank account held as joint tenant with mother. Mother provided all of the funds. Mother survives.

At the time of Dylan's death, he was a resident of the United States. He owns land located in a foreign country, which is subject to that country's death tax. This same land also can be subject to the Federal estate tax.

Classify each statement appropriately -Payment by the estate of church pledge made by decedent prior to death.

A transfer in trust in which the trustee has the power to accumulate income is not a gift of a future interest if the trustee never exercises the power.

If a donor has a fiscal year of July 1-June 30 for income tax purposes, this does not change the normal filing date for Form 709.

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

The use of the election to split gifts under § 2513 is not necessary for spouses who make gifts of their community property.

Reba purchases U.S. savings bonds which she lists in the name of Rod, Reba's son. The purchase of the bonds does not constitute a gift.

In the case of a transfer by gift, a QTIP election causes the property to be subject to the estate tax upon the death of the donee spouse.

At the time of her death, Chloe was involved in three trust arrangements. Details regarding these trusts are summarized below. ∙ Trust D (FMV of $3,200,000) was created by Chloe. Under its terms, Chloe holds a life estate, with her children designated as the remainder beneficiaries. ∙ Trust E (FMV of $800,000) was created by Chloe's father. Chloe holds a life estate, with her children designated as the remainder beneficiaries. ∙ Trust F (FMV of $1,300,000) was created by Chloe's mother. Chloe's children hold a life estate, and the remainder interest is to pass to their children (i.e., Chloe's grandchildren). As to these trusts, how much will be included in Chloe's gross estate?

Lila is the owner and beneficiary of a policy on the life of her husband, Austin. Upon Austin's prior death, the insurance proceeds paid to Lila do not qualify for the marital deduction.

In which of the following situations is Polly's property ownership interest not lost by her prior death?

Classify each statement appearing below -Maggie purchased an insurance policy on Jim's life and designated Susan as the beneficiary.

If the value of the gross estate is lower on the alternate valuation date than on the date of death, the date of death valuation cannot be used.

Harry and Brenda are husband and wife. Using his funds, Harry purchases real estate which he lists as: "Harry and Brenda, tenants by the entirety with right of survivorship." If Brenda dies first, none of the real estate will be included in her gross estate.

In determining whether a dividend issued on stock held by a decedent is included in the gross estate, the record date (rather than the declaration or payment dates) controls.