Exam 17: The Federal Gift and Estate Taxes

George leaves his share of the community property to Eva,his wife.Since the bequest involves community property,it does not qualify George's estate for a marital deduction.

Distributions from retirement plans and proceeds from life insurance plans usually are not subject to probate. a.Why are they not part of the probate estate? b.When might they be included in the probate estate?

At the time of her death on June 10,2008,Crystal owned the following assets. As to these transactions,how much is included in Crystal's gross estate?

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.Scheduled to be eliminated by 2010. c.Exists only if owners are husband and wife. d.A type of state death tax. e.A certificate of deposit listed as "B. Brown, payable on proof of death to my daughter, Evelyn." 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.Exclusion amount k.Replaced by a deduction. l.No correct match provided. -QTIP election

The deemed paid credit allowed for past taxable gifts cannot be less than the tax actually paid.

In 1985,Drew creates a trust with $1,000,000 of securities.Under the terms of the trust,Paula (Drew's wife)is granted a life estate with remainder to their children.Drew makes a QTIP election as to the trust.Drew dies in 1992 when the trust is worth $1,500,000,and Paula dies in 2008 when the trust is worth $2,000,000.Which,if any,of the following is a correct statement?

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 -Dower interest claimed by decedent's surviving spouse.

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.Scheduled to be eliminated by 2010. c.Exists only if owners are husband and wife. d.A type of state death tax. e.A certificate of deposit listed as "B. Brown, payable on proof of death to my daughter, Evelyn." 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.Exclusion amount k.Replaced by a deduction. l.No correct match provided. -Joint tenancy

The election of the alternate valuation date affects the income tax basis of property that an heir receives from an estate.

Waldo is his mother's sole heir and is the designated executor of her estate.Although the alternate valuation date would yield a smaller gross estate and less estate tax liability,the § 2032 election is not made.Instead,Waldo files a Form 706 for his mother's estate using higher date of death values.Why?

A Federal gift tax return need not be filed if no gift tax is payable.

For estate tax purposes,what is the difference between a surviving spouse's share of the community property and a dower (or curtesy)interest?

Michael and Addison are married and have a 9-year old grandson,Braydon.They want to contribute to a § 529 plan on behalf of Braydon's education.For 2008,what is the maximum amount they can transfer to the plan without making a taxable gift?

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.

Since the credit for state death taxes paid (under § 2011)has been eliminated,no double tax relief is available to an estate that is subject to both Federal and state death taxes.

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." Nadine predeceases Horace.

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.Scheduled to be eliminated by 2010. c.Exists only if owners are husband and wife. d.A type of state death tax. e.A certificate of deposit listed as "B. Brown, payable on proof of death to my daughter, Evelyn." 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.Exclusion amount k.Replaced by a deduction. l.No correct match provided. -Inheritance tax

Bernard's will passes $800,000 of cash to his widowed sister,Marie.The estate tax attributable to the cash is $120,000.Marie dies seven years later,and the estate tax generated by the $800,000 is $140,000.How much of a credit for tax on prior transfers will Marie's estate be allowed?

At the time of Dylan's death,he was a resident of Newark.He owns land located in Australia,which is subject to that country's death tax.This same land also is subject to the Federal estate tax.

By his will,all of Rusty's property passes outright to his wife,Patsy.As Patsy was not given a general power of appointment or Rusty's executor did not make a QTIP election,Rusty's estate is not allowed a marital deduction.