Exam 13: The Estate Tax

In 2006,Roger gives stock valued at $100,000 to Martha.Roger and Martha are not related.In 2008,Martha uses the stock then valued at $110,000 as partial consideration to acquire realty costing $220,000.Pat (her brother)furnishes the remaining $110,000 of consideration.The realty is titled in the names of Martha and Pat as joint tenants with right of survivorship.This year,Martha dies and Pat survives.The realty is valued at $300,000 at Martha's death.How much,if any,of the realty's value will be included in Martha's estate?

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

Betty dies on February 20,2013.Her estate consisted of the following assets,all valued as of her date of death: Stock with a basis of $40,000 and a fair market value of $200,000 Home valued at $1,500,000 and a basis of $490,000 Cash of $70,000 Life insurance on Betty's life owned by her daughter with a $500,000 face value What is Betty's gross estate?

Mary creates and funds a revocable trust.Mary names her son to receive the income for life and her grandson to receive the property upon the son's death.What are Mary's powers with respect to the trust,and how will the trust be treated in her estate?

Joe dies late in 2011 and his estate is subject to an estate tax of $2 million.He leaves all of his assets to his daughter,Claudia.Claudia dies in early 2013.Which of the following statements is correct?

Martin transfers stock to an irrevocable trust and names himself to receive the trust income for life with the remainder interest gifted to his son.When Martin dies,

A qualified disclaimer is a valuable estate planning tool because

Identify which of the following statements is false.

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?

Listed stocks are valued at their closing price on the date of death.

Identify which of the following statements is true.

Ray died on March 4.His estate includes some stock and a parcel of land.The stock is still owned by the estate on September 4,but the land is sold on August 30.If Ray's executor elects the alternate valuation date,what values would be used for estate tax purposes for the stock and the land?

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?

Sasha gives $1,000,000 to her granddaughter.Sasha has used all of her unified credit and is in the 40% marginal gift tax bracket;ignore the annual exclusion and exemption.What is the amount of her tax on this transfer?

Identify which of the following statements is true.

In 2001,Polly and Fred,brother and sister,purchased a condominium at a golf resort.Polly contributed 60% of the $200,000 cost;Fred contributed 40%.Polly dies in the current year when the condominium has a $300,000 value.How much is included in Polly's estate?

Ted died on May 3.At the time of his death,he owned a beach house valued at $250,000.On June 10,the beach house was completely destroyed by a hurricane and there was no insurance coverage.If the executor elects to use the alternate valuation date,the executor will

Following are the fair market values of Wilma's assets at her date of death: The executor of Wilma's estate did not elect the alternate valuation date.The amount includible in Wilma's gross estate is

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