Exam 27: Family Tax Planning

At the time of his death,Lance held a life estate in the LM Trust.Under which of the following circumstances will the LM Trust not be included in his gross estate?

The election of the alternate valuation date can affect the amount of a charitable deduction allowed to an estate for a bequest to a qualified charity.

Classify each statement appearing below. a.No taxable transfer occurs b.Gift tax applies c.Estate tax applies -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.

All of the charitable organizations that qualify for estate tax purposes also qualify for income tax purposes.

Match each statement with the correct choice. Some choices may be used more than once or not at all. a.In the current year, Debby, a widow, dies. Two years ago she inherited a large amount of wealth from her brother.b.Death does not defeat an owner's interest in property.c.Exists only if husband and wife are involved.d.A type of state tax on transfers by death.e.Must decrease the amount of the gross estate.f.Annual exclusion not allowed.g.Cumulative in effect.h.Right of survivorship present as to type of ownership.i.Avoids the terminable interest rule of the marital deduction.j.Exemption equivalent.k.Bypass amount.l.No correct match provided. -Alternate valuation date (§ 2032)

For Federal estate tax purposes,the gross estate does not include property that will pass to a surviving spouse.

In 2011 and with $100,000,Ronald establishes a joint savings account with his cousin,Allison.In 2015,Allison withdraws the $100,000 and disappears.Ronald made a gift to Allison in 2015.

In 2015,grandparents contribute jointly owned funds to a § 529 qualified tuition plan on behalf of their granddaughter.The maximum annual exclusion allowed to them is $140,000 ($28,000 × 5 years).

In which of the following situations is Polly's property ownership interest not lost by her prior death?

Sandy pays a local college for her non-dependent boyfriend's tuition.The payment is subject to the Federal gift tax.

Classify each of the independent statements appearing below. a.Some or all of the interest included in the decedent's gross estate.b.None of the interest included in the decedent's gross estate. -Bank account held as joint tenant with mother.Mother provided all of the funds.Mother survives.

At the time of his death in 2015,Leroy owed Federal income taxes on income earned in 2013.Leroy's estate can claim an estate tax deduction for the income tax it pays.

Classify each statement appearing below. a.No taxable transfer occurs b.Gift tax applies c.Estate tax applies -Using his own funds,Horace establishes a savings account designating ownership as follows: "Horace and Nadine as joint tenants with right of survivorship." Horace later withdraws all of the funds.

In arriving at the taxable estate,expenses incurred in administering community property are deductible only in proportion to the deceased spouse's interest in the community.

Rachel owns an insurance policy on the life of Albert with Belle as the designated beneficiary.Upon Rachel's prior death,nothing regarding this policy is included in her gross estate.

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

Match each statement with the correct choice. Some choices may be used more than once or not at all. a.In the current year, Debby, a widow, dies. Two years ago she inherited a large amount of wealth from her brother.b.Death does not defeat an owner's interest in property.c.Exists only if husband and wife are involved.d.A type of state tax on transfers by death.e.Must decrease the amount of the gross estate.f.Annual exclusion not allowed.g.Cumulative in effect.h.Right of survivorship present as to type of ownership.i.Avoids the terminable interest rule of the marital deduction.j.Exemption equivalent.k.Bypass amount.l.No correct match provided. -Tenancy in common

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

Among the assets included in Taylor's gross estate are the following. Fair Market Value Date of Death Six Months After Date of Death Stock in Grebe Corporation Stock in Rail Corporation Office building $7,000,000 800,000 900,000 $6,800,000 850,000 890,000 a.What is the amount of Taylor's gross estate if date of death value is used? b.What is the amount of Taylor's gross estate if the alternate valuation date is elected? c.Suppose all of Taylor's assets pass to her surviving spouse.Does this have any impact on the choice of valuation date? Explain.

Classify each statement appropriately. a.Deductible from the gross estate in arriving at the taxable estate.b.Not deductible from the gross estate in arriving at the taxable estate. -Post-death property taxes paid to county on realty included in the gross estate.