Exam 27: The Federal Gift and Estate Taxes

At the time of her death,Rita held a promissory note from a loan she had made to her son.If Rita's will forgives the loan,the note is not included in her gross estate.

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.Overrides the terminable interest rule of the marital deduction. j.Exemption equivalent. k.Bypass amount. l.No correct match provided. -Credit for tax on prior transfers

Rachel owns an insurance policy on the life of Albert with Belle as the designated beneficiary.Upon Rachel's death,nothing regarding this policy is included in her gross estate.

Comment on the following differences between the Federal estate and gift taxes. a.Applicable unified transfer tax credit. b.Applicable unified transfer tax rates. c.Availability of the charitable and marital deductions. d.Availability of the annual exclusion.

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

Classify each statement appearing below. -Homer purchases a U.S.savings bond listing title as: "Homer,payable to Bernice upon Homer's death." Bernice is Homer's sister.Homer dies four years later,and Bernice cashes in the bond and keeps the proceeds.

Classify each of the independent statements appearing below. -Decedent owned a policy on the life of his spouse with himself as the designated beneficiary.The spouse survives.

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 purchases the bond.

If the value of the gross estate is lower on the alternate valuation date than on the date of death,the date of death valuation cannot be used.

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.

Transfers to political organizations are exempt from the application of the Federal gift tax.

Lila is the owner and beneficiary of a policy on the life of her husband,Austin.Upon Austin's death,the insurance proceeds paid to Lila do not qualify for the marital deduction.

Ben and Lynn are married and have four pre-teen grandchildren.They want to contribute to a § 529 plan on behalf of their education.For 2017,what is the maximum amount they can transfer to the plan without making a taxable gift?

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

At the time of her death on October 4,Kaitlyn was involved in the following transactions. As to these transactions,Kaitlyn's gross estate includes:

In 2017,grandparents contribute jointly owned funds to a § 529 qualified tuition plan on behalf of their granddaughter.The maximum annual exclusion allowed to them is $140,000 ($28,000 × 5 years).

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.Overrides the terminable interest rule of the marital deduction. j.Exemption equivalent. k.Bypass amount. l.No correct match provided. -QTIP election

Classify each statement appropriately. -Selling expenses incurred to sell estate assets in order to pay administration expenses.

In 2015,Noah and Kelly acquire real estate for $2,000,000,with Noah furnishing $400,000 of the purchase price and Kelly providing the balance.Title to the property is listed as: "Noah and Kelly,equal tenants in common." Noah dies first in 2017,when the real estate is worth $4,000,000. a.Were there any tax consequences in 2015? Explain. a. and b.How much, as to the real estate, is included in Noah's gross estate? b., would it make any difference whether Noah and Kelly are brother and sister or husband and wife? c.As to parts

The Federal gift tax does not include a: