Exam 13: The Estate Tax

Julian died on November 1 and owned 100 shares of a New York Stock Exchange stock. The stock traded at a high of 100 and a low of 98 on November 1. It opened at 98 and closed at 100. On Julian's estate tax return, what will the per-share and total value of the stock be?

Mr. Howell died this year. He willed a copyright with a 10-year remaining life to Mrs. Howell. His will also sets up a trust for the benefit of Mrs. Howell whom he entitles to receive all of the income semiannually until the earlier of her remarriage or her death. Upon her remarriage or death, the trust property is to be distributed to their children. Do the copyright and trust transfers qualify for the marital deduction? Explain.

The alternate valuation date is generally

Identify which of the following statements is true.

Explain how shares of stock traded on a stock exchange are valued. What is the blockage rule?

In 2020, Paul transfers $1,000,000 to a trust benefiting his three children. As trustee, he has the power to determine the amount of distributions each year. Paul dies in the current year when the trust has a value of $1,200,000. How much of the trust's value is included in Paul's estate?

Melissa transferred $650,000 in trust in 2006: income for life to herself, the remainder to her son. What part, if any, of the value of the trust's assets will be included in Melissa's estate?

List the various categories of estate tax deductions, and compare them with the categories of gift tax deductions. What differences exist?

The following items were discovered in reviewing materials for John's estate tax return: (1)Two years ago, John sold stock to his son, Patrick, for $30,000. At the date of sale, the stock had a value of $65,000. The value of the stocks at John's death was $90,000. (2)John owned a beach house, worth $500,000, with his sister, Amber, who paid for it. (3)John's home was held in a tenancy by the entirety with his wife, Julia. Julia paid for the house, which had a value of $300,000 on the date of his death. (4)John's clothing and other personal belongings are worth $3,700 on the date of his death. What amount is included in John's estate?

A terminable interest is one that ceases upon the passage of time or the occurrence of some event.

Identify which of the following statements is false.

Ernie died this year. His will creates a $2,000,000 QTIP trust for his widow. Ernie's executor elects to claim the marital deduction for the QTIP transfer. At the time of the surviving spouse's death, the value of the QTIP trust is $3.6 million. The amount of the QTIP trust included in the surviving spouse's gross estate is

Identify which of the following statements is false.

Joe dies late in 2018 and his estate is subject to an estate tax of $2 million. He leaves all of his assets to his daughter, Claudia. Claudia dies in early 2020. Which of the following statements is correct?

Identify which of the following statements is true.

In 1997, Barry and Fred provide $20,000 and $60,000 of consideration, respectively, to purchase a beach house titled in both their names as joint tenants with right of survivorship. Barry dies in the current year and is survived by Fred. The beach house is valued at $100,000. What amount must be included in Barry's gross estate for the beach house?

Wally died on November 15. His gross estate includes 100 shares of ABC Corporation stock. On November 15, ABC's stock trades were at a high of $100, a low of $92, and a close of $94. What is the per-share value of the stock in Wally's estate?

The GSTT's (generation-skipping transfer tax)purpose is

Identify which of the following statements is true.

On December 1, 1976, Bart made a gift and claimed a $30,000 specific exemption. When Bart died in 2017, his tax base was $2,000,000. Assuming the maximum unified credit is $780,800, what is the credit available when computing Bart's estate tax?