Exam 13: The Estate Tax

Identify which of the following statements is false.

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?

One of the major problems facing executors in managing the estate is

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

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

Four years ago,David gave land to Mike that he purchased for $70,000,which is presently worth $100,000.Three years ago,Mike exchanged the land (then worth $150,000)along with a $100,000 cash contribution made by David for a new piece of land worth $250,000.The new land is titled with David and Mike as joint tenants with the right of survivorship.When Mike dies this year,the land is worth $300,000.Mike's estate will include

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

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?

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

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?

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.

Reversionary interests in publicly traded stocks included in a gross estate must be valued

Identify which of the following statements is true.

Identify which of the following statements is true.

Praneh Patel,a widower,died in March of the current year.His gross estate is $5,325,000,and at the time of his death,he owed debts of $40,000.His will made a charitable bequest of $280,000 and left the rest of his property to his children.His administrative expenses are estimated to be about $55,000.What tax issues should the estate's CPA consider when preparing Praneh's estate tax return and his estate's income tax return?

Lou dies on April 12,2011.All of Lou's property passed to Paula,his daughter.Paula dies on January 15,2013.Both Lou's and Paula's estates pay federal estate taxes.Lou's estate tax was $350,000.How much can Paula's estate claim for a credit for tax on prior transfers?

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

At Mark's death,Mark owed a debt of $40,000 plus $2,000 of accrued interest.Mark's funeral expenses were $5,000,and Mark's charge card had a balance due of $400.The expected administration costs for the estate are $2,000.Assume the estate will owe no income taxes in the next few years and that the taxable estate is expected to be in excess of $1 million.What amount should the estate deduct?

The alternate valuation date can be elected for estate tax purposes only if the election