Exam 27: The Federal Gift and Estate Taxes

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. -Alternate valuation date

Classify each statement appropriately. -Casualty loss to property before the death of the owner.

Manuel,a citizen and resident of Argentina,makes a gift to his children of a ranch located in Colorado.Manuel will be subject to the U.S.gift tax.

In community property states,not all property acquired after marriage by either spouse is community property.

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. -Inheritance tax

Matt and Patricia are husband and wife and live in Oregon.In 2000 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 2018,Matt dies first when the residence is worth $2 million.A correct statement as to these transactions is:

In 2005,Mandy and Hal (mother and son) purchased land for $600,000 as joint tenants with right of survivorship.Of the $600,000 purchase price,Mandy provided $300,000 and Hal $300,000 (of which $200,000 had been received as a gift from Mandy).Hal dies first when the land is worth $3,000,000.As to the land,Hal's gross estate must include:

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.

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

In 2004,Katelyn inherited considerable property when her father died.When Katelyn dies in 2018,her estate may be able to claim a credit as to some of the estate taxes paid by her father's estate.

In his will,Hernando provides for $50,000 to go to the Madrid,Spain,school system.Because it is a foreign charity,the bequest will not qualify as a charitable deduction for estate tax purposes.

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. -Exclusion amount

The election of the alternate valuation date can affect the amount of a charitable deduction allowed to an estate for a bequest to a qualified charity.

An individual generally tries to reduce the present value of any Federal transfer tax liability.

At the time of his death,Leroy owed Federal income taxes on income earned in a prior year.Leroy's estate can claim an estate tax deduction for the income tax it pays.

At the time of his death,Raul owned a residence with his wife,Manuela,as joint tenants.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 of the independent statements appearing below. -Cash dividends on stock owned by the decedent (declaration and record dates preceded death but payment date was after death).

Lyle and Kelly are brother and sister.Using his funds,Lyle purchases land,listing title as: "Lyle and Kelly,joint tenants with right of survivorship." If Kelly dies first,none of the land is included in her gross estate.

Classify each statement appearing below. a.No taxable transfer occurs b.Gift tax applies c.Estate tax applies -In full settlement of her marital rights,Henry transfers property to his wife,Nancy.Three months later,Henry and Nancy are divorced.

At the time of her death,Megan was involved in the following. ​ As to these transactions,Megan's gross estate must include: