Exam 18: The Federal Gift and Estate Taxes

For Federal estate and gift tax purposes,the exclusion amount is not the same thing as the bypass amount.

At the time of her death in 2012,Chloe was involved in three trust arrangements.Details regarding these trusts are summarized below. As to these trusts,how much will be included in Chloe's gross estate?

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

Lila is the owner and beneficiary of a policy on the life of her husband,Austin.Upon Austin's prior death,the insurance proceeds paid to Lila qualifies for the marital deduction.

Which,if any,of the following is a correct statement regarding the filing of a gift tax return (Form 709)?

Sally's will passes real estate to Otto (her surviving spouse).The real estate is worth $800,000 but is subject to a mortgage of $200,000.The transfer provides Sally's estate with a marital deduction of $600,000.

If a donor has a fiscal year of July 1-June 30 for income tax purposes,this does not change the normal filing date for Form 709.

In which,if any,of the following independent situations can the alternate valuation date be elected? Value of Gross Estate Estate Tax Result Date of Alternate Date of Alternate Death Date Death Date

When Travis learns he is seriously ill,he transfers an insurance policy on his life (maturity value of $2,000,000)to his wife Alexis.The couple's adult children are the designated beneficiaries of the policy.Has Travis acted wisely?

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.

Eric dies at age 96 and is survived by his third wife,Monique (age 22),and a granddaughter,Paula (age 50).Eric's will divides his $11 million estate between these two survivors.Both of these transfers are subject to the generation skipping transfer tax (GSTT).

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?

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?

Harry and Brenda are husband and wife.Using her funds,Brenda purchases real estate which she lists as: "Harry and Brenda,tenants by the entirety with right of survivorship." If Brenda dies first,all of the value of the real estate will be included in her gross estate.

Although qualified tuition plans under § 529 are treated favorably for gift tax purposes,such plans are subject to estate tax consequences upon the grantor's death.

Calvin's will passes $800,000 of cash to his widowed sister,Muriel.The estate tax attributable to the cash is $110,000.Muriel dies five years later,and the estate tax generated by the $800,000 is $100,000.How much of a credit for tax on prior transfers will Muriel's estate be allowed?

Lyle and Beatrice are brother and sister.Using his funds,Lyle purchases land,listing title as: "Lyle and Beatrice,joint tenants with right of survivorship." If Lyle dies first,all of the land is included in his gross estate.

In 2011 and with $100,000,Ronald establishes a joint savings account with his cousin,Allison.In 2012,Allison withdraws the $100,000 and disappears.Ronald made a gift to Allison in 2012.

In determining the Federal gift tax on a current gift:

Cary and Bo are husband and wife.Using their community funds,they create a trust,life estate to Bo,remainder to their children.Four years later,Bo predeceases Cary.Nothing as to this trust is included in Bo's gross estate.