Exam 18: The Federal Gift and Estate Taxes

Which, if any, of the following is a characteristic of the Federal estate tax?

Accrued interest on state and local bonds is not subject to the Federal estate tax.

To make the election to split gifts, spouses must file a Form 709 Federal gift tax return).

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

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.

In his will, Hernando provides for $50,000 to go to the Madrid, Spain, school system. Because it is a foreign charity, the bequest will not qualify as a charitable deduction for estate tax purposes.

The Federal gift-splitting election:

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

The essential purpose of the marital deduction is to defer any estate tax liability until the second spouse dies.

Harry and Brenda are husband and wife. Using his funds, Harry purchases real estate that he lists as: "Harry and Brenda, tenants by the entirety with right of survivorship." If Brenda dies first, none of the real estate is included in her gross estate.

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). 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. -Community property

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 the Internal Revenue Code.

A tenancy by the entirety is restricted in most states to having more than two joint owners.

Classify each of the following statements. -Maggie purchased an insurance policy on Jim's life and designated Susan as the beneficiary. Four years later, Jim dies, and Susan collects the insurance proceeds.

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

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

To avoid the terminable interest limitation on the marital deduction, a QTIP election is made.

Stacey inherits unimproved land fair market value of $6 million) from her father on June 1, 2019. She disclaims her interest in the property as follows: one-third on December 1, 2019; one-third on January 3, 2020; and the remaining one-third on May 31, 2020. In all cases, the disclaimers pass the interest to her son the next heir under state law). The Federal gift tax applies to Stacey for:

Classify each of the following statements. -Maggie purchased an insurance policy on Jim's life and designated Susan as the beneficiary.