Question 1

Homer and Laura were husband and wife. At the time of Homer's death, 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). Homer owned an insurance policy on his life (maturity value of $1,000,000) with Laura 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

Question 2

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

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 3

Andrea dies on April 30. Which, if any, of the following items is included in her gross estate?

Accepted Answer

A)  Rents for the month of May (received on May 2) on an apartment building she owned. 
B)  Rents for the month of March (received on May 2) on an apartment building she owned. 
C)  Insurance recovery from a fire that occurred on November 1 and destroyed Andrea's residence. 
D)  A loan made by Andrea to her daughter and forgiven by Andrea in a prior tax year.

Question 4

Ben and Lynn are married and have four preteen grandchildren. They want to contribute to a § 529 plan on behalf of their education. For 2019, what is the maximum amount they can transfer to the plan without making a taxable gift?

Accepted Answer

The answer of Ben and Lynn are married and have...

Question 5

Ling and Jiang are unrelated and equal joint tenants in a plot of land. Ling died this year. Ling's share of the land goes to:

Accepted Answer

A)  The party named in Ling's will. 
B)  Ling's surviving spouse. 
C)  Jiang under community property principles. 
D)  Jiang under a right of survivorship.

Question 6

A tenancy by the entirety is restricted in most states to having more than two joint owners.

Accepted Answer

A) True 
 B)False

Question 7

Sidney dies and leaves property to his sister Giselle. Thirteen months later, Giselle dies. Giselle's estate can claim a full credit for any Federal estate taxes paid by Sidney's estate as to amounts passing to Giselle.

Accepted Answer

A) True 
 B)False

Question 8

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 later withdraws all of the funds.

Accepted Answer

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

Question 9

Classify each of the following statements.
-Howard establishes a trust, life estate to his children and remainder to the grandchildren. Under its terms, the trust is revocable by Howard.

Accepted Answer

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

Question 10

In which of the following independent situations has Jean made a gift?

Accepted Answer

A)  She gives her 19-year old son $20,000 to use for his college expenses. 
B)  She buys her nondependent grandfather a new $120,000 RV for his birthday. 
C)  She sends $44,000 to Collins University to cover her nephew's tuition. The nephew does not qualify as Jean's dependent. 
D)  She contributes $10,000 to her U.S. Senator's reelection campaign.

Question 11

Match each statement with the correct choice. Some choices may be used more than once or not at all.
-Tenancy in common

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

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

Accepted Answer

A) True 
 B)False

Question 13

On the date of her death, Ava owned the following.
∙ An insurance policy (face amount of $500,000) on the life of Benjamin (Ava's current husband)
with herself as the designated beneficiary. The policy has a cash surrender value of $50,000.
∙ A life estate in a trust created by Alexander (Ava's deceased prior husband). The trust (current value of $2,900,000) was worth $1,000,000 when created 10 years ago. A QTIP election was made by the executor of Alexander's estate.
∙ Federal income tax refund of $80,000 on a prior year's tax return and paid to the executor of
Ava's estate.
As to these items, how much is included in Ava's gross estate?

Accepted Answer

The answer of On the date of her death, Ava...

Question 14

Some states impose inheritance taxes, but the Federal tax system does not.

Accepted Answer

A) True 
 B)False

Question 15

A surviving spouse's share of the community property is not included in the deceased spouse's gross estate.

Accepted Answer

A) True 
 B)False

Question 16

Mitch pays the surgeon and the hospital for his aunt's heart bypass operation. The transfer is not subject to the gift tax.

Accepted Answer

A) True 
 B)False

Question 17

Concerning the Federal tax on generation-skipping transfers:

Accepted Answer

A)  The charitable deduction is allowed to reduce the tax. 
B)  The marital deduction is allowed to reduce the tax. 
C)  A credit is allowed for any state-level GST tax paid. 
D)  All of these statements are true.

Question 18

Classify each of the following independent statements:.
-Interest on municipal bonds accrued after 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 19

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.

Accepted Answer

A) True 
 B)False

Question 20

At the time of his death, Tom owned some common stock. $\begin{array}{lcc} 
&\text {Date of }\
&\text {Death }&\text { Value Six}\
& \text { Value } & \text { Months Later } \
\text { Citron Corporation } & \$ 1,500,000 & \$ 1,100,000 \
\text { Grey Corporation } & 1,300,000 & 1,400,000
\end{array}$ If the alternate valuation date is properly elected, the value of Tom's estate as to these stocks is:

Accepted Answer

A)  $2,300,000. 
B)  $2,400,000. 
C)  $2,500,000. 
D)  $2,700,000.

Exam 27: The Federal Gift and Estate Taxes

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

Andrea dies on April 30. Which, if any, of the following items is included in her gross estate?

Ben and Lynn are married and have four preteen grandchildren. They want to contribute to a § 529 plan on behalf of their education. For 2019, what is the maximum amount they can transfer to the plan without making a taxable gift?

Ling and Jiang are unrelated and equal joint tenants in a plot of land. Ling died this year. Ling's share of the land goes to:

A tenancy by the entirety is restricted in most states to having more than two joint owners.

Sidney dies and leaves property to his sister Giselle. Thirteen months later, Giselle dies. Giselle's estate can claim a full credit for any Federal estate taxes paid by Sidney's estate as to amounts passing to Giselle.

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 later withdraws all of the funds.

Classify each of the following statements. -Howard establishes a trust, life estate to his children and remainder to the grandchildren. Under its terms, the trust is revocable by Howard.

In which of the following independent situations has Jean made a gift?

Match each statement with the correct choice. Some choices may be used more than once or not at all. -Tenancy in common

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

Some states impose inheritance taxes, but the Federal tax system does not.

A surviving spouse's share of the community property is not included in the deceased spouse's gross estate.

Mitch pays the surgeon and the hospital for his aunt's heart bypass operation. The transfer is not subject to the gift tax.

Concerning the Federal tax on generation-skipping transfers:

Classify each of the following independent statements:. -Interest on municipal bonds accrued after death.

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.