Exam 13: The Estate Tax

Mary creates and funds a revocable trust.Mary names her son to receive the income for life and her grandson to receive the property upon the son's death.What are Mary's powers with respect to the trust,and how will the trust be treated in her estate?

Discuss the transferor provisions relating to the estate tax,and provide three examples of transactions governed by the transferor provisions.

Ray died on March 4.His estate includes some stock and a parcel of land.The stock is still owned by the estate on September 4,but the land is sold on August 30.If Ray's executor elects the alternate valuation date,what values would be used for estate tax purposes for the stock and the land?

The alternate valuation date is generally

Four years ago,Roper transferred to his son ownership of a $100,000 life insurance policy that Roper purchased on his own life in 2000.The cash value of the policy on the transfer date was $25,000.Roper died on March 1st of this year.The amount included in Roper's gross estate due to the life insurance policy is

An executor can value each asset in an estate at the lower of its FMV at death or the alternate valuation date.

The FMV of an asset for gift or estate tax purposes is the same except for

Identify which of the following statements is true.

Explain why living trusts are popular tax-planning vehicles.

Which of the following is deductible in arriving at the amount of the taxable estate?

Ted died on May 3.At the time of his death,he owned a beach house valued at $250,000.On June 10,the beach house was completely destroyed by a hurricane and there was no insurance coverage.If the executor elects to use the alternate valuation date,the executor will

Identify which of the following statements is false.

Which of the following is not a credit for purposes of computing the federal estate tax liability?

Taxpayers can avoid the estate tax by making gifts at least a year prior to death.

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?

Yoyo Corporation maintains a retirement plan for its employees to which it makes 70% of the contributions and the employees make 30%.Gary dies this year and is employed at the time of his death.Gary's spouse will receive an annuity valued at $600,000 from the retirement plan.How much of the annuity will be included in Gary's gross estate?

Compare the tax treatment of administration expenses with that of the decedent's debts.

Identify which of the following statements is true.

In 2012,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?

Yee made $3 million of taxable gifts in 1993 and paid gift taxes (less the unified credit)of $1,098,000.Yee died in 2013 with a taxable estate of $10,000,000.At current rates,the gift taxes payable on $3 million would be $1,145,800.Yee died in a year when the unified credit was $2,045,800.Determine her estate tax liability.