Exam 18: The Federal Gift and Estate Taxes

For Federal estate tax purposes, the gross estate includes property that the decedent owns at the time of death. It may also include property that the decedent no longer owns. Explain.

Two brothers, Sam and Bob, acquire real estate as equal tenants in common. Of the purchase price of $200,000, Sam furnished $80,000 while Bob provided the balance. If Sam dies first ten years later when the real estate is worth $600,000, his estate includes $240,000 as to the property.

When one spouse predeceases the other, the credit for prior transfers does not apply.

In some cases, the Federal gift tax can be imposed on someone other than the donor.

The IRS does not consider property settlements in consideration of marriage as being transfers for valuable consideration. Consequently, such prenuptial settlements are subject to the Federal gift tax. Why, then, are property settlements incident to divorce exempt from the gift tax?

At the time of his death, Gene held a Roth IRA account with his wife as the designated beneficiary. The IRA is included in Gene's gross estate.

For Federal estate tax purposes, the gross estate may include property the decedent does not own.

At the time of her death in an automobile accident, Laura left a modest probate estate, most of which she had inherited from her mother several years ago. Comment on Laura's Federal estate tax position in connection with each of the following points.

At the time of her death on June 4, 2011, Mary owned the following assets. As to these transactions, how much is included in Mary's gross estate?

Waldo is his mother's sole heir and is the designated executor of her estate. Although the alternate valuation date would yield a smaller gross estate and less estate tax liability, the § 2032 election is not made. Instead, Waldo files a Form 706 for his mother's estate using higher date of death values. Why?

In the past, the amount of the unified tax credit has been the same for both transfers by gift and transfers by death.

Andrea dies on April 30, 2011. Which, if any, of the following items is included in her gross estate?

Since the credit for state death taxes paid (under § 2011) has been eliminated, no tax relief is available to an estate that is subject to both Federal and state death taxes.

Madeline pays for her mother's nursing home expenses. Under what conditions might such payments not be a gift?

If interest is provided for in loans between related parties, there is no imputed interest, as a gift loan does not result.

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 dies.

An estate tax is a tax on the right of an heir to receive property on the death of the owner.

What is the justification for the terminable interest rule that is applicable to the marital deduction?

Concerning the election to split gifts under § 2513, which of the following statements is incorrect?

Don and Roxana are husband and wife and live in a common law state. Pursuant to the estate tax rules applicable to annuities (§ 2039), which of the following is not a correct statement?