Question 1

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.

Accepted Answer

A) True 
 B)False

Question 2

Classify each of the following statements:
-In full settlement of her marital rights, Henry transfers property to his wife, Nancy. Three months later, Henry and Nancy are divorced.

Accepted Answer

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

Question 3

A husband and wife make a gift of their jointly owned vacation home to their adult children. The gift-splitting election must be made.

Accepted Answer

A) True 
 B)False

Question 4

Classify each of the following statements:
-Under a prenuptial agreement, Herbert transfers stock to Norma. One month later, Herbert and Norma are married.

Accepted Answer

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

Question 5

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

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 6

Although qualified tuition plans under § 529 are treated favorably for gift tax purposes, such plans are included in the gross estate upon the grantor's death.

Accepted Answer

A) True 
 B)False

Question 7

Paul, a U.S. citizen, will avoid the Federal estate tax if he becomes a Canadian resident and owns no property located in the United States at the time of his death.

Accepted Answer

A) True 
 B)False

Question 8

Classify each of the following statements.
-Maggie purchased an insurance policy on Jim's life and designated Susan as the beneficiary.

Accepted Answer

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

Question 9

Classify each of the following independent statements:.
-Note receivable issued by a grandson and forgiven by the decedent in her will.

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 10

In 2019, grandparents contribute jointly owned funds to a § 529 qualified tuition plan on behalf of their granddaughter.
The maximum annual exclusion allowed to them is $150,000 ($30,000 × 5 years).

Accepted Answer

A) True 
 B)False

Question 11

Sally's will passes real estate to Otto (her surviving husband). The real estate is worth $8,000,000 but is subject to a mortgage of $2,000,000. The transfer provides Sally's estate with a marital deduction of $6,000,000.

Accepted Answer

A) True 
 B)False

Question 12

Pauline sells antique furniture to her daughter, Nicole, for $10,000. If the furniture is really worth $100,000, Pauline has made a gift to Nicole of $100,000.

Accepted Answer

A) True 
 B)False

Question 13

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

Accepted Answer

A) True 
 B)False

Question 14

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

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 15

Which of the following is not a characteristic of both the Federal gift tax and the Federal estate tax?

Accepted Answer

A)  A deduction for state death taxes may be available. 
B)  A charitable deduction is available. 
C)  A marital deduction is available. 
D)  An exclusion amount is available in computing the tax.

Question 16

Harry and Brenda are husband and wife. Using her funds, Brenda purchases real estate that she lists as: "Harry and Brenda, joint tenants with right of survivorship." If Brenda dies first, all of the value of the real estate is included in her gross estate.

Accepted Answer

A) True 
 B)False

Question 17

Classify each of the following statements.
-Homer purchases a U.S. savings bond listing title as: "Homer, payable to Bernice upon Homer's death." Bernice is Homer's sister.

Accepted Answer

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

Question 18

Under certain circumstances, the gift-splitting election can be made even though the electing spouses no longer are married to each other.

Accepted Answer

A) True 
 B)False

Question 19

Calvin's will passes $800,000 of cash to his widowed sister, Muriel. The estate tax attributable to the cash is
$110,000. Muriel dies five years later, and the estate tax generated by the $800,000 is $100,000. How much of a credit for tax on prior transfers will Muriel's estate be allowed?

Accepted Answer

The answer of Calvin's will passes $800,000 of cash to...

Question 20

The Federal gift-splitting election:

Accepted Answer

A)  Allows the annual exclusion of both spouses to reduce the gift tax due. 
B)  Allows the exemption equivalent of both spouses to reduce the gift tax due. 
C)  Is made on both spouses' Forms 709. 
D)  All of these.

Exam 27: The Federal Gift and Estate Taxes

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 of the following statements: -In full settlement of her marital rights, Henry transfers property to his wife, Nancy. Three months later, Henry and Nancy are divorced.

A husband and wife make a gift of their jointly owned vacation home to their adult children. The gift-splitting election must be made.

Classify each of the following statements: -Under a prenuptial agreement, Herbert transfers stock to Norma. One month later, Herbert and Norma are married.

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

Although qualified tuition plans under § 529 are treated favorably for gift tax purposes, such plans are included in the gross estate upon the grantor's death.

Paul, a U.S. citizen, will avoid the Federal estate tax if he becomes a Canadian resident and owns no property located in the United States at the time of his death.

Classify each of the following statements. -Maggie purchased an insurance policy on Jim's life and designated Susan as the beneficiary.

Classify each of the following independent statements:. -Note receivable issued by a grandson and forgiven by the decedent in her will.

In 2019, grandparents contribute jointly owned funds to a § 529 qualified tuition plan on behalf of their granddaughter. The maximum annual exclusion allowed to them is $150,000 ($30,000 × 5 years).

Sally's will passes real estate to Otto (her surviving husband). The real estate is worth $8,000,000 but is subject to a mortgage of $2,000,000. The transfer provides Sally's estate with a marital deduction of $6,000,000.

Pauline sells antique furniture to her daughter, Nicole, for $10,000. If the furniture is really worth $100,000, Pauline has made a gift to Nicole of $100,000.

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

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

Which of the following is not a characteristic of both the Federal gift tax and the Federal estate tax?

Harry and Brenda are husband and wife. Using her funds, Brenda purchases real estate that she lists as: "Harry and Brenda, joint tenants with right of survivorship." If Brenda dies first, all of the value of the real estate is included in her gross estate.

Classify each of the following statements. -Homer purchases a U.S. savings bond listing title as: "Homer, payable to Bernice upon Homer's death." Bernice is Homer's sister.

Under certain circumstances, the gift-splitting election can be made even though the electing spouses no longer are married to each other.

Calvin's will passes $800,000 of cash to his widowed sister, Muriel. The estate tax attributable to the cash is $110,000. Muriel dies five years later, and the estate tax generated by the $800,000 is $100,000. How much of a credit for tax on prior transfers will Muriel's estate be allowed?

The Federal gift-splitting election: