Exam 13: The Estate Tax

Identify which of the following statements is true.

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.

The maximum amount of the stock redemption proceeds under Sec.303 is determined by summing all of the following except

Proceeds of a life insurance policy payable to the estate's executor,as the estate's representative,are

Ernie died this year.His will creates a $2,000,000 QTIP trust for his widow.Ernie's executor elects to claim the marital deduction for the QTIP transfer.At the time of the surviving spouse's death,the value of the QTIP trust is $3.6 million.The amount of the QTIP trust included in the surviving spouse's gross estate is

Two years ago,Nils transfers a $200,000 life insurance policy on his life to his daughter,Gail.The policy is worth $60,000 at the time of transfer and Gail pays Nils $50,000.When Nils dies this year,the $50,000 cash is still in a savings account.The consideration offset when computing Nils's gross estate is

Explain how shares of stock traded on a stock exchange are valued.What is the blockage rule?

The tax base for the federal estate tax is the total of the decedent's taxable estate and post-1986 taxable gifts if the decedent made gifts in 1981.

Denise died April 1 and owned several bonds that paid interest March 31 and September 30.Also,she owned stock that paid dividends quarterly on March 31,June 30,September 30,and December 31.Denise's estate received the interest and dividends on the payment dates.What should be included in Denise's gross estate?

An executor may elect to postpone payment of the estate tax attributable to a remainder or reversionary interest until 6 months after the interests of the other person(s)terminate.

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?

Identify which of the following statements is true.

Melissa transferred $650,000 in trust in 2006: income for life to herself,the remainder to her son.What part,if any,of the value of the trust's assets will be included in Melissa's estate?

Identify which of the following statements is true.

Outline and briefly describe the estate tax computation,beginning with the gross estate.

List the various categories of estate tax deductions,and compare them with the categories of gift tax deductions.What differences exist?

Briefly discuss how inter vivos gifts can be used to reduce the size of the estate tax base.

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

The probate estate includes property that passes by will or an intestacy statute and does not include property that passes due to a beneficiary designation.