Exam 18: The Federal Gift and Estate Taxes

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

Joint tenancies and tenancies by the entirety avoid probate,while tenancies in common and community property do not.Why?

In community property states,all property acquired after marriage by either spouse is community property.

At the time of his death in 2012,Leroy owed Federal income taxes on income earned in 2010.Leroy's estate cannot claim an estate tax deduction for the income tax it pays.

As reflected by the tax law,Congressional policy relative to the Federal gift and estate taxes has been very inconsistent.Comment on this policy regarding the following time periods.

The election of the alternate valuation date does include any income earned by the property after the date the deceased owner died.

Murray owns an insurance policy on the life of his father,Logan.Upon Logan's death,the policy proceeds of $2,000,000 are paid to the designated beneficiary,Grace.What are the tax consequences resulting from Logan's death based on the following assumptions?

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.

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

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 2012,Matt dies first when the residence is worth $2 million.A correct statement as to these transactions is:

A Federal gift tax return does not have to be filed if no gift tax is payable.

Andrea dies on April 30,2012.Which,if any,of the following items is included in her gross estate?

One of the reasons the estate tax was enacted was to prevent the avoidance of the gift tax by the making of "deathbed gifts."

At the time of her death in 2012,Amber owns property worth $5,000,000.Other information regarding her affairs is as follows. All of these items (except the casualty loss)were paid by her estate and none were deducted on Form 1041 (income tax return of the estate).What is Amber's taxable estate?

Before his nephew (Dean)leaves for college,Will loans him $400,000.Dean signs a note promising to repay the loan in five years.No interest element is provided.Which,if any,of the following is a tax consequence of this arrangement?

How could the § 2513 election to split gifts help avoid the generation-skipping transfer tax (GSTT)?

In 2010,Glen transferred several assets by gift to different persons.Glen dies in 2012.Information regarding the properties given is summarized below. The transfer of the land and the stocks and bonds resulted in a total gift tax of $60,000.As to these transactions,Glen's gross estate must include:

Becky made taxable gifts in 1974,2010,and 2012.In computing the gift tax on the 2012 gift,she must consider all of the prior taxable gifts.

Pauline sells antique furniture to her daughter,Nicole,for $10,000.If the furniture is really worth $100,000,Pauline has made a gift to Nicole of $100,000.

Under the terms of a trust created by Billie,Jody (Billie's brother)has the right to determine how its income is to be divided among Billie's children.Jody holds a special power of appointment.