Exam 18: The Federal Gift and Estate Taxes

Gerald and Pat are husband and wife and live in New York. Using joint funds, in 1990 they purchase an insurance policy on Gerald's life and designate their daughter, Marie, as the beneficiary. The policy has a maturity value of $4,000,000. Gerald dies first in 2011 and the insurance proceeds are paid to Marie. As to the proceeds:

In what manner does the tax law favor contributions to qualified tuition plans under § 529?

Becky made taxable gifts in 1974, 2010, and 2011. In computing the gift tax on the 2011 gift, she must consider all of the prior taxable gifts.

In 1995, Thalia purchases land for $900,000 and lists title in the names of her daughters as follows: "April and Theresa, joint tenants with right of survivorship." In 1999, April and Theresa purchase an apartment building for $1 million as equal tenants in common; April furnished $400,000 and Theresa furnished $600,000 of the cost. In the current year, April dies first in 2011 when the land is worth $1.5 million and the apartment building is worth $2 million. One of the results of these transactions is:

In the case of a transfer by gift, a QTIP election causes the property to be subject to the estate tax upon the death of the donee spouse.

A surviving spouse's share of the community property is not included in the deceased spouse's gross estate.

In 1980, Mandy and Hal (mother and son) purchased land for $600,000 as joint tenants with right of survivorship. Of the $600,000 purchase price, Mandy provided $300,000 and Hal $300,000 (of which $200,000 had been received as a gift from Mandy). In 2011, Hal dies first when the land is worth $3,000,000. As to the land, Hal's gross estate must include:

Which, if any, of the following statements correctly reflects the rules applicable to the alternate valuation date ?

Doyle died in 2000 and by will created a trust with the following provisions: "life estate to my wife, Grace, remainder upon her death to our children." Grace dies in 2011. Is the trust Doyle created included in Grace's gross estate? Explain.

A husband and wife make a gift of their vacation home to their adult children. If the property is owned jointly by them, the gift-splitting election need not be made.

Matt and Patricia are husband and wife and live in Oregon. In 1980 and using her funds, Patricia purchases a residence for $400,000, listing title to the property as "Matt and Patricia, joint tenants with right of survivorship." In 2011, Matt dies first when the residence is worth $2 million. A correct statement as to these transactions is:

At the time of her death, Megan was involved in the following. As to these transactions, Megan's gross estate must include:

The death of a tenant in common will defeat his or her interest in the property.

Ray purchases U.S. savings bonds which he lists as "Ray and Donna" as co-owners. Donna is Ray's daughter. Donna predeceases Ray. No gift or estate tax consequences result from this situation.

Barry pays State University for his daughter's room and board. Barry has made a transfer that is subject to the Federal gift tax.

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

Some states impose inheritance taxes, but the Federal tax system does not.

Cole purchases land for $500,000 and transfers it by gift to his two daughters, Madison and Paige, as equal joint tenants with the right of survivorship. Ten years later, when the land is worth $2,000,000, Madison predeceases Paige. Madison's executor includes none of the value of the land in her gross estate, as she contributed nothing toward its cost. Do you agree?

For Federal estate and gift tax purposes, the exclusion amount is the same thing as the exemption equivalent.

In which, if any, of the following independent situations has Jean made a gift?