Question 1

A Federal gift tax return need not be filed if no gift tax is payable.

Accepted Answer

A) True 
 B)False

Question 2

As a result of a fatal auto accident,Irene totaled a Bentley worth $95,000.If the insurance company covers $60,000 of the loss,Irene's estate can claim a deduction of $35,000 in arriving at the taxable estate.

Accepted Answer

A) True 
 B)False

Question 3

A gift between spouses that does not qualify for the marital deduction will require the filing of a Federal gift tax return (Form 709).

Accepted Answer

A) True 
 B)False

Question 4

Michael and Addison are married and have a 9-year old grandson,Braydon.They want to contribute to a § 529 plan on behalf of Braydon's education.For 2009,what is the maximum amount they can transfer to the plan without making a taxable gift?

Accepted Answer

$130,000.2 (number o

Question 5

Dustin and Penny are husband and wife and always have lived in Washington.At the time of Dustin's prior death in 2009,he was insured in the amount of $600,000 with Penny as the designated beneficiary.The policy was taken out by Dustin before marriage and the premiums thereon were paid as follows: 30% prior to marriage from Dustin's separate property and 70% after marriage from community funds.As to this policy,Dustin's gross estate includes:

Accepted Answer

A) $180,000. 
B) $210,000. 
C) $300,000. 
D) $390,000. 
E) $600,000. 
A) $180,000. 
B) $210,000. 
C) $300,000. 
D) $390,000. 
E) $600,000.

Question 6

In 2000,Murray and Pearl acquire real estate for $900,000,with Murray furnishing $300,000 of the purchase price and Pearl providing the balance.Title to the property is listed as: "Murray and Pearl,equal tenants in common." Murray dies first in 2009,when the real estate is worth $3,000,000.

Accepted Answer

The answer of In 2000,Murray and Pearl acquire real estate...

Question 7

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 not a tax consequence of this arrangement?

Accepted Answer

A) Will has made a gift to Dean of the interest element. 
B) Will has an interest expense deduction as to the interest element. 
C) Will has interest income as to the interest element. 
D) Dean may be allowed an income tax deduction as to the interest element. 
E) None of the above. 
A) Will has made a gift to Dean of the interest element. 
B) Will has an interest expense deduction as to the interest element. 
C) Will has interest income as to the interest element. 
D) Dean may be allowed an income tax deduction as to the interest element. 
E) None of the above.

Question 8

Which,if any,of the following is not a characteristic of the Federal estate tax?

Accepted Answer

A) A foreign tax credit is available. 
B) Pre-1977 taxable gifts need to be considered. 
C) The generation-skipping transfer tax may also apply. 
D) A credit for tax on prior transfers may be available. 
E) A charitable deduction is available. 
A) A foreign tax credit is available. 
B) Pre-1977 taxable gifts need to be considered. 
C) The generation-skipping transfer tax may also apply. 
D) A credit for tax on prior transfers may be available. 
E) A charitable deduction is available.

Question 9

If interest is provided for in loans between related parties,there is no imputed interest,as a gift loan does not result.

Accepted Answer

A) True 
 B)False

Question 10

Jordan owns an insurance policy on the life of his father,Milton.Upon Milton's death,the policy proceeds of $1,000,000 are paid to the designated beneficiary,Kinsey.What are the tax consequences resulting from Milton's death based on the following assumptions?

Accepted Answer

The answer of Jordan owns an insurance policy on the...

Question 11

In which of the following situations is Margie's property ownership interest not lost by her prior death?

Accepted Answer

A) Tenancy by the entirety. 
B) Tenancy in common. 
C) Joint tenancy. 
D) Life estate in an irrevocable trust. 
E) Margie is the annuitant in a straight-life annuity 
A) Tenancy by the entirety. 
B) Tenancy in common. 
C) Joint tenancy. 
D) Life estate in an irrevocable trust. 
E) Margie is the annuitant in a straight-life annuity

Question 12

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

Accepted Answer

A) True 
 B)False

Question 13

The same charitable organizations that qualify for income tax purposes qualify for estate tax purposes.

Accepted Answer

A) True 
 B)False

Question 14

A lifetime transfer that is supported by full and adequate consideration is not a gift.

Accepted Answer

A) True 
 B)False

Question 15

Doyle died in 2000 and by will created a trust with the following provisions: "life estate to my wife,Grace,remainder upon her death to our children." Grace dies in 2009.Is the trust Doyle created included in Grace's gross estate? Explain.

Accepted Answer

If Doyle's executor made the Q

Question 16

Homer and Laura are husband and wife.At the time of Homer's prior death in 2009,they owned the following: land as tenants by the entirety worth $2,000,000 (purchased by Homer)and stock as equal tenants in common worth $3,000,000 (purchased by Laura).Laura also owns an insurance policy on Homer's life (maturity value of $1,000,000)with herself as the designated beneficiary.Homer's will passes all his property to Laura.How much marital deduction is allowed Homer's estate?

Accepted Answer

A) $2,000,000. 
B) $2,500,000. 
C) $3,500,000. 
D) $4,500,000. 
E) None of the above. 
A) $2,000,000. 
B) $2,500,000. 
C) $3,500,000. 
D) $4,500,000. 
E) None of the above.

Question 17

At the time of his death,Lance held a life estate in the LM Trust.Under which of the following circumstances will the LM Trust not be included in his gross estate?

Accepted Answer

A) The trust was created by Lance's deceased wife and the executor of her estate did not make a QTIP election. 
B) The trust was created by Lance's father. 
C) The trust was created by Lance and is irrevocable. 
D) The trust was created by Lance and was revocable.He released the power to revoke two years before his death. 
E) Choices a.and b.but not c.and d. 
A) The trust was created by Lance's deceased wife and the executor of her estate did not make a QTIP election. 
B) The trust was created by Lance's father. 
C) The trust was created by Lance and is irrevocable. 
D) The trust was created by Lance and was revocable.He released the power to revoke two years before his death. 
E) Choices a.and b.but not c.and d.

Question 18

Community property law has been influential in the enactment of several provisions of the Federal estate and gift tax.In this regard,comment on the following.

Accepted Answer

The answer of Community property law has been influential in...

Question 19

Kim,a resident and citizen of Korea,dies during an operation at the Mayo Clinic in Rochester (MN).Just because Kim died in the U.S. ,he will not be subject to the Federal estate tax.

Accepted Answer

A) True 
 B)False

Question 20

Don and Roxana are husband and wife and live in a common law state.Pursuant to the estate tax rules applicable to annuities (§ 2039),which of the following is a correct statement?

Accepted Answer

A) Don has a straight-life unmatured annuity.Upon his death,none of the annuity is included in his gross estate. 
B) Don's retirement plan,to which his employer contributed 50%,is in the form of an annuity with a survivorship feature covering Roxana.Upon Don's prior death,all of the value of the survivorship feature is included in his gross estate. 
C) Don has an annuity with a survivorship feature covering Roxana and to which she contributed 50% of the premiums.Upon Don's prior death,only 50% of the value of the survivorship feature is included in his gross estate. 
D) Don has an annuity with a survivorship feature covering Roxana.If Roxana dies first,nothing regarding the annuity is included in her gross estate. 
E) All of the above statements are true. 
A) Don has a straight-life unmatured annuity.Upon his death,none of the annuity is included in his gross estate. 
B) Don's retirement plan,to which his employer contributed 50%,is in the form of an annuity with a survivorship feature covering Roxana.Upon Don's prior death,all of the value of the survivorship feature is included in his gross estate. 
C) Don has an annuity with a survivorship feature covering Roxana and to which she contributed 50% of the premiums.Upon Don's prior death,only 50% of the value of the survivorship feature is included in his gross estate. 
D) Don has an annuity with a survivorship feature covering Roxana.If Roxana dies first,nothing regarding the annuity is included in her gross estate. 
E) All of the above statements are true.

Exam 27: The Federal Gift and Estate Taxes

A Federal gift tax return need not be filed if no gift tax is payable.

As a result of a fatal auto accident,Irene totaled a Bentley worth $95,000.If the insurance company covers $60,000 of the loss,Irene's estate can claim a deduction of $35,000 in arriving at the taxable estate.

A gift between spouses that does not qualify for the marital deduction will require the filing of a Federal gift tax return (Form 709).

Michael and Addison are married and have a 9-year old grandson,Braydon.They want to contribute to a § 529 plan on behalf of Braydon's education.For 2009,what is the maximum amount they can transfer to the plan without making a taxable gift?

In 2000,Murray and Pearl acquire real estate for $900,000,with Murray furnishing $300,000 of the purchase price and Pearl providing the balance.Title to the property is listed as: "Murray and Pearl,equal tenants in common." Murray dies first in 2009,when the real estate is worth $3,000,000.

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 not a tax consequence of this arrangement?

Which,if any,of the following is not a characteristic of the Federal estate tax?

If interest is provided for in loans between related parties,there is no imputed interest,as a gift loan does not result.

Jordan owns an insurance policy on the life of his father,Milton.Upon Milton's death,the policy proceeds of $1,000,000 are paid to the designated beneficiary,Kinsey.What are the tax consequences resulting from Milton's death based on the following assumptions?

In which of the following situations is Margie's property ownership interest not lost by her prior death?

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

The same charitable organizations that qualify for income tax purposes qualify for estate tax purposes.

A lifetime transfer that is supported by full and adequate consideration is not a gift.

Doyle died in 2000 and by will created a trust with the following provisions: "life estate to my wife,Grace,remainder upon her death to our children." Grace dies in 2009.Is the trust Doyle created included in Grace's gross estate? Explain.

At the time of his death,Lance held a life estate in the LM Trust.Under which of the following circumstances will the LM Trust not be included in his gross estate?

Community property law has been influential in the enactment of several provisions of the Federal estate and gift tax.In this regard,comment on the following.

Kim,a resident and citizen of Korea,dies during an operation at the Mayo Clinic in Rochester (MN).Just because Kim died in the U.S. ,he will not be subject to the Federal estate tax.

Don and Roxana are husband and wife and live in a common law state.Pursuant to the estate tax rules applicable to annuities (§ 2039),which of the following is a correct statement?

An Introduction to Taxation and Understanding the Federal Tax Law

Working With the Tax Law

Computing the Tax

Gross Income: Concepts and Inclusions

Gross Income: Exclusions

Deductions and Losses: in General

Deductions and Losses: Certain Business Expenses and Losses

Depreciation,cost Recovery,amortization,and Depletion

Deductions: Employee and Self-Employed-Related Expenses

Deductions and Losses: Certain Itemized Deductions

Investor Losses

Tax Credits and Payments

Part 1--Property Transactions: Determination of Gain or Loss,basis Considerations,and Nontaxable Exchanges

Part 2--Property Transactions: Determination of Gain or Loss,basis Considerations,and Nontaxable Exchanges

Property Transactions: Capital Gains and Losses,1231,and Recapure Provisions

Alternative Minimum Tax

Accounting Periods and Methods

Corporations: Introduction and Operating Rules

Corporations: Organization and Capital Structure

Corporations: Distributions Not in Complete Liquidation

Distributions in Complete Liquidation and an Overview of Reorganizations

Partnerships

S Corporations

Exempt Entities

Multistate Corporate Taxation

Taxation of International Transactions

Tax Practice and Ethics

Income Taxation of Trusts and Estates

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