Exam 18: The Federal Gift and Estate Taxes

Although qualified tuition plans under § 529 are treated favorably for gift tax purposes, such plans are subject to estate tax consequences upon the grantor's death.

In 2000, Irv creates a revocable trust, income payable to his children for life, remainder to his grandchildren. In 2013, Irv relinquishes the power to revoke the trust. If Irv dies in 2015, the trust is not included in his gross estate.

Prior to his death in 2015, Ethan made the following taxable gifts. The policy on Ethan's life was given to the designated beneficiary. The gift of the stock and the land generated gift taxes of $28,750 and $65,250, respectively. As to these transfers, how much is included in Ethan's gross estate?

At the time of his death, Gene held a Roth IRA account with his wife as the designated beneficiary. The IRA is included in Gene's gross estate.

Classify each of the independent statements appearing below -Decedent holds a life estate in a trust created by her spouse who died five years ago. The executor of the spouse's estate made a QTIP election as to the trust. Decedent's son is the remainderman of the trust.

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

As a result of an auto accident from which she later died, Irene totaled a Bentley worth $95,000. If the insurance company covers $60,000 of the loss, Irene's estate can claim a casualty loss of $35,000 in arriving at the taxable estate.

Sandy pays a local college for her non-dependent boyfriend's tuition. The payment is subject to the Federal gift tax.

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

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

Harry and Brenda are husband and wife. Using her funds, Brenda purchases real estate which she lists as: "Harry and Brenda, joint tenants with right of survivorship." If Brenda dies first, all of the value of the real estate will be included in her gross estate.

Doyle died in 2000 and by will created a trust with the following provisions: "life estate to my wife, Grace, remainder upon her death to our children." Grace dies this year. Is the trust Doyle created included in Grace's gross estate? Explain.

A timely issued disclaimer by an heir transfers the property to someone else without a Federal gift tax result.

Classify each statement appearing below -Hector transfers funds to his aunt so she can obtain a much needed hip operation. The aunt does not qualify as Hector's dependent.

In 2013, Glen transferred several assets by gift to different persons. Glen dies in 2015. Information regarding the properties given is summarized below. ​ The transfer of the land and the stocks and bonds resulted in a total gift tax of $60,000. As to these transactions, Glen's gross estate must include:

Sally's will passes real estate to Otto (her surviving spouse). The real estate is worth $800,000 but is subject to a mortgage of $200,000. The transfer provides Sally's estate with a marital deduction of $600,000.

Transfers to political organizations are exempt from the application of the Federal gift tax.

Match each statement with the correct choice. Some choices may be used more than once or not at all -Credit for tax on prior transfers (under § 2013)

In 2005, Mandy and Hal (mother and son) purchased land for $600,000 as joint tenants with right of survivorship. Of the $600,000 purchase price, Mandy provided $300,000 and Hal $300,000 (of which $200,000 had been received as a gift from Mandy). In 2015, Hal dies first when the land is worth $3,000,000. As to the land, Hal's gross estate must include:

Classify each of the independent statements appearing below -Dower interest claimed by decedent's surviving spouse.