Exam 17: The Federal Gift and Estate Taxes

In 1982,Jordan and Kinsey acquire realty for $900,000,with Jordan furnishing $225,000 of the purchase price and Kinsey providing the balance.Title to the property is listed as: "Jordan and Kinsey,joint tenants with right of survivorship." In 2008,Jordan dies first when the realty is worth $3,400,000.How much is included in his gross estate under the following circumstances? a.Jordan and Kinsey are brother and sister. b.Jordan and Kinsey are husband and wife.

Using his separate funds,Wilbur purchases an annuity which pays him a specified amount until death.Upon Wilbur's prior death,a reduced amount is to be paid to Marcia for her life.Wilbur predeceases Marcia.Nothing concerning the annuity contract is included in Wilbur's gross estate.

In 2004,Marcie made some taxable gifts upon which she paid a Federal gift tax of $42,000.If Marcie dies in 2008,the $42,000 is included in her gross estate under the "gross up" rule.

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

If a donor has a fiscal year of July 1-June 30 for income tax purposes,this does not change the normal filing date for Form 709.

Charles makes a taxable gift in 2008.In determining the tax liability on this gift,he must add all prior taxable gifts.However,Charles may claim a credit for the taxes actually paid on the prior gifts.

Mitch pays the surgeon and the hospital for his aunt's gall bladder operation.If the aunt does not qualify as Mitch's dependent,the transfer is subject to the 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 tenants by the entirety with surviving spouse.Decedent provided none of the funds.

Classify each statement appearing below. a.No taxable transfer occurs b.Gift tax applies c.Estate tax applies -Meg gives her 18-year-old son money for his college tuition and living expenses (e.g.,room and board).

Classify each statement appearing below. a.No taxable transfer occurs b.Gift tax applies c.Estate tax applies -In full settlement of her marital rights,Henry transfers property to his wife,Nancy.Three months later,Henry and Nancy are divorced.

Classify each statement appearing below. a.No taxable transfer occurs b.Gift tax applies c.Estate tax applies -Under her father's will,Faith is to receive 10,000 shares of GE common stock.Fifteen months after her father's death,Faith disclaims the 10,000 shares.

At the time of Cal's death,part of his estate consists of the following. Under Cal's will,all of his property passes to his wife,Kim.How much marital deduction is Cal's estate allowed?

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 -Straight life annuity policy purchased by decedent who was the annuitant.

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 -State death tax imposed on the estate.

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.Homer dies four years later,and Bernice cashes in the bond and keeps the proceeds.

Brooke made taxable gifts as follows: $300,000 in 1973,$200,000 in 1974,$600,000 in 1985,and $700,000 in 2001.In 2008,Brooke dies leaving a taxable estate of $3,000,000.Brooke's tax base for applying the unified tax rate schedules (for estate tax purposes)is:

Which,if any,of the following is a correct statement regarding the filing of a gift tax return (Form 709)?

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. -Tenancy by the entirety

Prior to his death in 2008,Cameron made the following taxable gifts. The policy of Cameron's life was given to the designated beneficiary.The gift of the stock and the land generated gift taxes of $28,750 and $64,250,respectively. As to these transfers,how much is included in Cameron's gross estate?

In 1980,Spencer creates a revocable trust,income payable to his children for life,remainder to his grandchildren.Thirty-two months before he dies in 2008,Spencer relinquishes the power to revoke the trust.The trust is included in Spencer's gross estate.