Exam 18: The Federal Gift and Estate Taxes

Iris dies intestate (i.e., without a will). All of her property passes to her heirs in accordance with the order of distribution prescribed under applicable state law.

In 2011 and with $100,000, Ronald establishes a joint savings account with his cousin, Allison. In 2016, Allison withdraws the $100,000 and disappears. Ronald made a gift to Allison in 2016.

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

For the estate tax, transfers to a surviving spouse who is not a U.S. citizen will qualify for the marital deduction if the transfer is to a qualified domestic trust.

Match each statement with the correct choice. Some choices may be used more than once or not at all. -Dower interest claimed by decedent's surviving spouse.

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.

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.

On the date of her death, Ava owned the following: ∙ An insurance policy (face amount of $500,000) on the life of Benjamin (Ava's current husband) with herself as the designated beneficiary. The policy has a cash surrender value of $50,000. ∙ A life estate in a trust created by Alexander (Ava's deceased prior husband). The trust (current value of $2,900,000) was worth $1,000,000 when created ten years ago. A QTIP election was made by the executor of Alexander's estate. ∙ Federal income tax refund of $80,000 on a prior year's tax return and paid to the executor of Ava's estate. As to these items, how much is included in Ava's gross estate?

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

Match each statement with the correct choice. Some choices may be used more than once or not at all. -Interest on municipal bonds accrued after death.

A lifetime transfer that is supported by full and adequate consideration is not a gift.

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.

Under certain circumstances, the gift-splitting election can be made even though the electing spouses are no longer married to each other.

In 2014, Katherine made some taxable gifts upon which she paid a Federal gift tax of $96,000. If Katherine dies in 2016, the $96,000 is included in her gross estate under the "gross up" rule.

Andrea dies on April 30, 2016. Which, if any, of the following items is included in her gross estate?

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

Gerald and Pat are husband and wife and live in New York. In 2005, they purchase an insurance policy (joint ownership) on Gerald's life and designate their daughter, Marie, as the beneficiary. The policy has a maturity value of $4,000,000 and lists ownership as tenants in common. Gerald dies first in 2016 and the insurance proceeds are paid to Marie. As to the proceeds:

A Federal gift tax return does not have to be filed if no gift tax is payable.

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.

Match each statement with the correct choice. Some choices may be used more than once or not at all. -Alternate valuation date (§ 2032)