Question 1

To avoid the terminable interest limitation on the marital deduction, a QTIP election is made.

Accepted Answer

A) True 
 B)False

Question 2

In the case of a transfer by gift, a QTIP election causes the property to be subject to the estate tax upon the death of the donee spouse.

Accepted Answer

A) True 
 B)False

Question 3

The Federal transfer tax system includes three separate taxes.

Accepted Answer

A) True 
 B)False

Question 4

Accrued interest on state and local bonds is not subject to the Federal estate tax.

Accepted Answer

A) True 
 B)False

Question 5

Sam purchases a U.S. savings bond that he registers as follows: "Sam, payable to Don upon Sam's death." A gift occurs when Sam purchases the bond.

Accepted Answer

A) True 
 B)False

Question 6

Classify each of the following independent statements:.
-State income tax refund received after death on a tax return filed before death.

Accepted Answer

A) Some or all of the asset is included in the decedent’s gross estate. 
B) None of the asset is included in the decedent’s gross estate.

Question 7

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 election is not made. Instead, Waldo files a Form
706 for his mother's estate using higher date of death values. Why?

Accepted Answer

The answer of Waldo is his mother's sole heir and...

Question 8

Classify each statement appropriately.
-Post-death property taxes paid to the county on realty included in the gross estate.

Accepted Answer

A) Deductible from the gross estate in arriving at the taxable estate. 
B) Not deductible from the gross estate in arriving at the taxable estate.

Question 9

Manfredo makes a donation of $50,000 to the church in Mexico City where he was baptized. The gift does not qualify as a charitable contribution for Federal income tax purposes.

Accepted Answer

A) True 
 B)False

Question 10

Which, if any, of the following statements correctly reflects the rules applicable to the alternate valuation date?

Accepted Answer

A)  The election is made by the executor. 
B)  It can be elected even though no estate tax return need be filed. 
C)  It can be elected only if it reduces the amount of the gross estate or reduces the estate tax liability. 
D)  Its election does not affect the income tax basis of property included in the gross estate.

Question 11

Match each statement with the correct choice. Some choices may be used more than once or not at all.
-Federal gift tax

Accepted Answer

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.

Question 12

Georgia owns an insurance policy on the life of Jake with Scarlet as the designated beneficiary. Upon Scarlet's death, no Federal transfer tax consequences result.

Accepted Answer

A) True 
 B)False

Question 13

Classify each of the following statements:
-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.

Accepted Answer

A) No taxable transfer occurs. 
B) Gift tax applies. 
C) Estate tax applies.

Question 14

Concerning the Federal tax on generation-skipping transfers:

Accepted Answer

A)  The tax applies in addition to any applicable gift or estate tax. 
B)  The tax applies in lieu of any applicable gift or estate tax. 
C)  The tax is applied at a flat 33 percent tax rate. 
D)  The annual gift tax exclusion cannot be used to reduce the tax.

Question 15

Classify each of the following statements.
-Using his own funds, Horace establishes a savings account designating ownership as follows: "Horace and Nadine as joint tenants with right of survivorship." Horace predeceases Nadine.

Accepted Answer

A) No taxable transfer occurs. 
B) Gift tax applies. 
C) Estate tax applies.

Question 16

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

Accepted Answer

A)  A charitable deduction is available. 
B)  The alternate valuation date of § 2032 can be elected. 
C)  A disclaimer procedure may avoid the tax. 
D)  A marital deduction is available.

Question 17

At the time of Dylan's death, he was a resident of the United States. He owns land located in a foreign country, which is subject to that country's estate tax. This same land also can be subject to the Federal estate tax.

Accepted Answer

A) True 
 B)False

Question 18

The Federal transfer taxes generally apply a flat rate of:

Accepted Answer

A)  10%. 
B)  40%. 
C)  65%. 
D)  The taxes apply three graduated rates, not a flat rate.

Question 19

Classify each of the following statements.
-Using his own funds, Horace establishes a savings account designating ownership as follows: "Horace and Nadine as joint tenants with right of survivorship." Nadine predeceases Horace.

Accepted Answer

A) No taxable transfer occurs. 
B) Gift tax applies. 
C) Estate tax applies.

Question 20

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:

Accepted Answer

A)  $500,000. 
B)  $1,500,000. 
C)  $2,500,000. 
D)  $3,000,000.

Exam 27: The Federal Gift and Estate Taxes

To avoid the terminable interest limitation on the marital deduction, a QTIP election is made.

In the case of a transfer by gift, a QTIP election causes the property to be subject to the estate tax upon the death of the donee spouse.

The Federal transfer tax system includes three separate taxes.

Accrued interest on state and local bonds is not subject to the Federal estate tax.

Sam purchases a U.S. savings bond that he registers as follows: "Sam, payable to Don upon Sam's death." A gift occurs when Sam purchases the bond.

Classify each of the following independent statements:. -State income tax refund received after death on a tax return filed before death.

Classify each statement appropriately. -Post-death property taxes paid to the county on realty included in the gross estate.

Manfredo makes a donation of $50,000 to the church in Mexico City where he was baptized. The gift does not qualify as a charitable contribution for Federal income tax purposes.

Which, if any, of the following statements correctly reflects the rules applicable to the alternate valuation date?

Match each statement with the correct choice. Some choices may be used more than once or not at all. -Federal gift tax

Georgia owns an insurance policy on the life of Jake with Scarlet as the designated beneficiary. Upon Scarlet's death, no Federal transfer tax consequences result.

Classify each of the following statements: -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.

Concerning the Federal tax on generation-skipping transfers:

Classify each of the following statements. -Using his own funds, Horace establishes a savings account designating ownership as follows: "Horace and Nadine as joint tenants with right of survivorship." Horace predeceases Nadine.

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

At the time of Dylan's death, he was a resident of the United States. He owns land located in a foreign country, which is subject to that country's estate tax. This same land also can be subject to the Federal estate tax.

The Federal transfer taxes generally apply a flat rate of:

Classify each of the following statements. -Using his own funds, Horace establishes a savings account designating ownership as follows: "Horace and Nadine as joint tenants with right of survivorship." Nadine predeceases Horace.