Exam 18: The Federal Gift and Estate Taxes

To avoid the terminable interest limitation on the marital deduction, the surviving spouse must be granted a general power of appointment over the trust property, or a QTIP election must be made.

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

Which of the following is not a characteristic of both the Federal gift tax and the Federal estate tax?

At the time of Clint's death, part of his estate consists of the following. ∙ Roth IRA (value of $1,000,000) with Jennifer as the designated beneficiary. ∙ Land (worth $3,000,000) held in joint tenancy with Jennifer. Jennifer is Clint's wife and originally furnished the purchase price. ∙ Building (worth $3,000,000) held as equal tenants in common with Jennifer and Dana. Dana is Clint's mother, and she originally purchased the property. ​ Under Clint's will, all of his property passes to his wife, Jennifer. How much marital deduction is Clint's estate allowed? Clint and Jennifer live in Tennessee.

Walt dies intestate (i.e., without a will) in the current year with a gross estate valued at $4,000,000. Under applicable state law, Walt's property passes to Kelly or to Belle, in that order. Kelly has an estimated net worth of $3,000,000 while Belle's is zero. From a tax planning standpoint, what course of action might be advisable?

The U.S. has estate and gift tax conventions (i.e., treaties) with most of the countries of the world.

Sometimes also known as transaction taxes, Federal gift and estate taxes are excise taxes.

For Federal estate tax purposes, the gross estate cannot include property the decedent no longer owns.

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.

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

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

In 2000, Irv creates a revocable trust, income payable to his children for life, remainder to his grandchildren. In 2010, Irv relinquishes the power to revoke the trust. If Irv dies in 2016, the trust is not included in his gross estate.

For both the Federal gift and estate tax, a deduction is allowed for certain transfers to a spouse.

In which, if any, of the following independent situations has Trent made a gift?

Sidney dies and leaves property to his sister Giselle. Thirteen months later, Giselle dies. Under § 2013 (credit for tax on prior transfers), Giselle's estate can claim a full credit for any Federal estate taxes paid by Sidney's estate as to amounts passing to Giselle.

At the time of his death in 2016, Leroy owed Federal income taxes on income earned in 2014. Leroy's estate can claim an estate tax deduction for the income tax it pays.

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.