Exam 27: The Federal Gift and Estate Taxes

Classify each of the independent statements appearing below. -Proceeds of an insurance policy on decedent's life.Decedent's son purchased the policy and is its owner and beneficiary.

For Federal estate tax purposes,the gross estate cannot include property the decedent does not own.

Peggy gives $200,000 to her grandson.This is an example of a direct skip for purposes of the GSTT (generation-skipping transfer tax).

Classify each statement appearing below. a.No taxable transfer occurs b.Gift tax applies c.Estate tax applies -Under a prenuptial agreement,Herbert transfers stock to Norma.One month later,Herbert and Norma are married.

Sally's will passes real estate to Otto (her surviving husband).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.

The death of a tenant in common will cancel his or her interest in the 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. -Federal gift tax

Classify each statement appropriately. -Mortgage on land included in gross estate and willed to decedent's children.

Classify each statement appearing below. a.No taxable transfer occurs b.Gift tax applies c.Estate tax applies -Harry pays for the tuition for his niece to attend Drake University.The niece does not qualify as Harry's dependent.

For Federal estate,gift,and generation-skipping tax purposes,the exemption equivalent is the same thing as the exclusion amount.

Classify each statement appropriately. -State death tax imposed on the 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. -Tenancy in common

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.

Classify each statement appropriately. -Payment of unpaid gift 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. -Future interest

At the time of his death,Norton was involved in the following transactions. ​ What amount is included in Norton's gross estate?

Classify each statement appearing below. -Using his own funds,Horace establishes a savings account designating ownership as follows: "Horace and Nadine as joint tenants with right of survivorship." Horace later withdraws all of the funds.

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.

The Federal transfer tax system includes three separate taxes.

Ray purchases U.S.savings bonds which he lists as "Ray and Donna" as co-owners.Donna is Ray's daughter.Donna predeceases Ray.No gift or estate tax consequences result from this situation.