Exam 18: The Federal Gift and Estate Taxes

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

At the time of his death, Norton was involved in the following transactions. -Owned land in joint tenancy with Emily. The land is worth $600,000 and was purchased by Norton 15 years ago for $150,000. -Owned land in a tenancy by the entirety with Amy. The land is worth $800,000 and was purchased by Norton five years ago for $450,000. -Owned land in an equal tenancy in common with Noah. The land is worth $400,000 and was purchased by Norton four years ago for $300,000. -Owned City of Dayton bonds worth $500,000. What amount is included in Norton's gross estate?

Iris dies intestate (i.e., without a will). All of her property passes to her heirs in accordance with the order of distribution prescribed under applicable state law.

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.

Classify each statement appearing below. a. No taxable transfer occurs b. Gift tax applies c. Estate tax applies -Howard establishes a trust, life estate to his children, remainder to the grandchildren. Under its terms, the trust is revocable by Howard. Howard later relinquishes the right to revoke the trust.

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. Death does not defeat an owner's interest in property. c. Exists only if husband and wife are involved. d. A type of state tax on transfers by death. e. Must decrease the amount of the gross estate. 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. Exemption equivalent. k. Bypass amount. l. No correct match provided. -Joint tenancy

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. Ten months after her father's death, Faith disclaims 10,000 shares.

Becky made taxable gifts in 2000, 2010, and 2013. In computing the gift tax on the 2013 gift, she must consider all of the prior taxable gifts.

Prior to his death in 2012, Ethan made the following taxable gifts. The policy on Ethan's life was given to the designated beneficiary. The gift of the stock and the land generated gift taxes of $28,750 and $65,250, respectively. As to these transfers, how much is included in Ethan's gross estate?

In which of the following situations is Polly's property ownership interest not lost by her prior death?

Interest on state and local bonds is not subject to the Federal estate 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. -Note receivable issued by a grandson and forgiven by the decedent in her will.

At the time of his prior death, Raul owned a residence with his wife, Manuela, as tenants by the entirety. The residence was purchased by Manuela ten years ago at a cost of $300,000 and has a fair market value of $1.4 million. Raul's estate will be allowed no marital deduction as to the property.

Classify each statement appearing below. a. No taxable transfer occurs b. Gift tax applies c. Estate tax applies -Clarence pays the medical providers (e.g., physicians, hospital) for his aunt's gall bladder operation. The aunt does not qualify as Clarence's dependent.

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?

Under the alternate valuation date election, each asset in the gross estate is valued at the lesser of the date of death value or six months thereafter.

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?

A marital deduction is not allowed if the surviving spouse is a nonresident alien.

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.

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. -Ten cemetery lots purchased by decedent prior to death for use by himself and his family.