Exam 17: The Federal Gift and Estate Taxes

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 -Casualty loss to property before the death of the owner.

Sally's will passes real estate to Otto (her surviving spouse).The real estate is worth $800,000 but is subject to a mortgage of $200,000.The transfer provides Sally's estate with a marital deduction of $600,000.

Cary and Bo are husband and wife.Using their community funds,they create a trust,life estate to Bo,remainder to their children.Four years later,Bo predeceases Cary.Nothing as to this trust is included in Bo's gross estate.

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 -Interest on municipal bonds accrued prior to death.

Derek and Tanya are husband and wife and live in Arizona,a community property state.If Derek receives a gift of land from his father,the land is their community property.

At the time of his death on August 4,2008,Cecil owned the following assets. How much,as to these transactions,is included in Cecil's gross estate?

Classify each statement appearing below. a.No taxable transfer occurs b.Gift tax applies c.Estate tax applies -Clarence pays the medical providers (e.g.,physicians,hospital)for his aunt's gall bladder operation.The aunt does not qualify as Clarence's dependent.

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.

The Tax Relief Reconciliation Act of 2001 proposes to phase out the Federal gift tax by 2010.

Classify each statement appearing below. a.No taxable transfer occurs b.Gift tax applies c.Estate tax applies -Homer purchases a U.S.savings bond listing title as: "Homer,payable to Bernice upon Homer's death." Bernice is Homer's sister.

Classify each statement appearing below. a.No taxable transfer occurs b.Gift tax applies c.Estate tax applies -Hugh loans his adult daughter,Nadia,$800,000 to start her own business.No interest is provided for,and Nadia signs a note that is payable in four years.

A timely issued disclaimer by an heir transfers the property to someone else without a gift tax result.

At the time of her death,Patricia was a participant in her employer's qualified pension plan.Her accrued balance in the plan is: Patricia also was covered by her employer's group term life insurance program.Her policy (maturity value of $50,000)is made payable to Fletcher (Patricia's husband).Fletcher is also the designated beneficiary of the pension plan. a.Regarding these assets, how much is included in Patricia's gross estate? b.In Patricia's taxable estate? c.How much income must Fletcher recognize?

Matt and Hillary are husband and wife and live in Pennsylvania.Using joint funds,in 1990 they purchase an insurance policy on Matt's life and designate their daughter,Sandra,as the beneficiary.The policy has a maturity value of $2,000,000.Matt dies first and the insurance proceeds are paid to Sandra.As to the proceeds:

In which,if any,of the following independent situations can the alternate valuation date be elected?

Joint tenancies and tenancies by the entirety avoid probate,while tenancies in common and community property do not.Why?

Transfers to political organizations are exempt from the application of the Federal gift tax.

Sam purchases a U.S.savings bond which he registers as follows: "Sam,payable to Don upon Sam's death." A gift occurs when Sam purchases the bond.

Sometimes also known as transaction taxes,Federal gift and estate taxes are excise taxes.

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 -Selling expenses incurred to sell estate assets in order to pay administration expenses.