Exam 18: The Federal Gift and Estate Taxes

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.

Under the alternate valuation date election, each asset in the gross estate is valued at the lesser of the date of death value or six months thereafter.

The current top Federal transfer tax rate of 40% is the highest rate ever imposed.

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.

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 2016, what is the maximum amount they can transfer to the plan without making a taxable gift?

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.

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 estate tax. This same land also can be subject to the Federal estate tax.

Concerning the election to split gifts under § 2513, which of the following statements is incorrect?

Under his grandfather's will, Tad is entitled to receive shares of Kroger Corporation. For Federal tax purposes, Tad is allowed to disclaim some of these shares and accept the others.

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

The purpose of the marital deduction is to place married decedents in common law states on par with those in community property jurisdictions.

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

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 IRS does not consider property settlements in consideration of marriage as being transfers for valuable consideration. Consequently, such prenuptial settlements are subject to the Federal gift tax. Why, then, are property settlements incident to divorce exempt from the gift tax?

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

For gift tax purposes, a property settlement in consideration of marriage (i.e., prenuptial agreement) is treated the same as a property settlement incident to a divorce.

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

Match each statement with the correct choice. Some choices may be used more than once or not at all. -Cash dividends on stock owned by the decedent (declaration and record dates preceded death but payment date was after death).

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 2016, Hal dies first when the land is worth $3,000,000. As to the land, Hal's gross estate must include:

Match each statement with the correct choice. Some choices may be used more than once or not at all. -Homer purchases a U.S. savings bond listing title as: "Homer, payable to Bernice upon Homer's death." Bernice is Homer's sister. Homer dies four years later, and Bernice cashes in the bond and keeps the proceeds.