Exam 18: The Federal Gift and Estate Taxes

Classify each statement appearing below -Under a prenuptial agreement, Herbert transfers stock to Norma. One month later, Herbert and Norma are married.

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

Classify each of the independent statements appearing below -Interest on municipal bonds accrued after death.

One of the reasons the estate tax was enacted was to prevent the avoidance of the gift tax by the making of "deathbed gifts."

Death does not defeat a deceased spouse's interest in a tenancy by the entirety.

Manuel, a citizen and resident of Argentina, makes a gift to his children of a ranch located in Colorado. Manuel will be subject to the U.S. gift tax.

Classify each statement appearing below -Cash donation to the reelection campaign of a member of the U.S. Congress.

A husband and wife make a gift of their jointly owned vacation home to their adult children. The gift-splitting election must be made.

The death of a tenant in common will defeat his or her interest in the property.

In some cases, the Federal gift tax can be imposed on someone other than the donor.

Classify each of the independent statements appearing below -State income tax refund received after death on a tax return filed before death.

Brad holds a life estate in a trust created by his father, while Scott holds a life estate in a trust created by himself. Upon their deaths, Scott must include the trust in his gross estate, while Brad need not include his trust. Why?

For Federal estate and gift tax purposes, the exemption equivalent is the same thing as the exclusion amount.

Georgia owns an insurance policy on the life of Jake, with Scarlet as the designated beneficiary. Upon Scarlet's prior death, no transfer tax consequences result.

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

In 2011 and with $100,000, Ronald establishes a joint savings account with his cousin, Allison. In 2015, Allison withdraws the $100,000 and disappears. Ronald made a gift to Allison in 2015.

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 later withdraws all of the funds.

In 2004, Katelyn inherited considerable property when her father died. When Katelyn dies in 2015, her estate may be able to use § 2013 (credit for tax on prior transfers) as to some of the estate taxes paid by her father's estate.

Calvin's will passes $800,000 of cash to his widowed sister, Muriel. The estate tax attributable to the cash is $110,000. Muriel dies five years later, and the estate tax generated by the $800,000 is $100,000. How much of a credit for tax on prior transfers will Muriel's estate be allowed?

Cary and Bo are husband and wife. Using their community funds, they create a trust, life estate to Bo, remainder to their children. Four years later, Cary predeceases Bo. Nothing as to this trust is included in Cary's gross estate.