Exam 13: The Estate Tax

Karen died on May 5 of the current year.Her executor elects date-of-death valuation.Karen's gross estate possibly includes the following items: • Joint checking account (with her husband),which has a balance of $10,000.Her husband did not contribute to the account. • Joint savings account (with her daughter),which has a balance of $50,000.Her daughter did not contribute to the account. • Life insurance policy on the life of Karen,having a face value of $400,000.The cost of a comparable policy immediately before Karen's death is $150,000.Karen's estate is the beneficiary. • Life insurance policy on the life of Karen's daughter,having a face value of $100,000 with an interpolated terminal reserve immediately before Karen's death of $30,000. Unexpired premiums are $5,000.Karen is the beneficiary.How much,if any,of these items are included in Karen's estate?

A stock redemption to pay death taxes under Sec.303 is generally treated as

The value of stock that is not publicly traded may be determined by considering

Mary Johnson dies early in the current year.All her property passes subject to her will,which states that all of her property is to go to a QTIP trust for Dan for life with the remainder to their children.Mary's gross estate is about $5 million,and her Sec.2053 deductions are very small.Dan,who is in poor health,already owns about $3 million of property.What tax issues should Dan Johnson and the estate's executor consider with respect to the property that passes to the QTIP trust?

A special power of appointment exists if the holder can exercise the power in favor of himself or herself,his or her creditors,or the creditors of his or her estate.

For 2014,the unified credit is equivalent to a statutory exemption of

Identify which of the following statements is true.

In 2001,Clara made taxable gifts of $2 million.This year,Clara dies with a taxable estate of $4 million.At the time of her death,the FMV of the property Clara gifted in 2001 is $8 million.What is the amount of the estate tax base?

Michael Moriarty,a widower,is quite elderly and is beginning to do some estate planning.His goal is to reduce his transfer taxes.He is considering purchasing land with a high potential for appreciation and owning it with his grandson as joint tenants with rights of survivorship.Michael would provide all of the consideration,estimated to be about 11.5 million.What tax issues should Michael Moriarty consider with respect to the purchase of the land?

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?

Discuss some of the factors to be considered in determining the amount of property that should pass under the marital deduction.

Compare the credits available for estate tax purposes with the credits available for gift tax purposes.What differences exist?

Proceeds of a life insurance policy payable to the estate's executor,as the estate's representative,are

Identify which of the following statements is true.

On March 1,Sue transfers stock worth $20,000 to Frank.How long must Sue live to avoid inclusion of the $20,000 of stock in her gross estate?

On March 1,Bart transfers ownership of a $700,000 life insurance policy on his life that he purchased in 2011.How long must Bart live to avoid inclusion of the $700,000 death benefit in his estate?

When computing the federal estate tax liability in 2014,the maximum amount for a taxable estate (not tentative tax)that the unified credit for the current year will eliminate all of the tax is

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

Following are the fair market values of Wilma's assets at her date of death: The executor of Wilma's estate did not elect the alternate valuation date.The amount includible in Wilma's gross estate is

On December 1,1976,Bart made a gift and claimed a $30,000 specific exemption.When Bart died in 2008,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 is what?