Question 1

Matt and Patricia are husband and wife and live in Oregon. In 2010 and using her funds, Patricia purchased a residence for $400,000, listing title to the property as "Matt and Patricia, joint tenants with right of survivorship." In 2020, Matt dies before Patricia when the residence is worth $2 million. A correct statement as to these transactions is:

Accepted Answer

A)  In 2020, Matt's gross estate includes $1 million and a marital deduction of $1 million is allowed for estate tax purposes. 
B)  In 2010, Patricia made a gift to Matt but no marital deduction is available for gift tax purposes. 
C)  In 2010, Patricia did not make a taxable gift to Matt. 
D)  In 2020, Matt's estate includes nothing as to the property.

Question 2

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 3

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 4

At the time of her death, Sophia was a participant in her employer's qualified pension plan. Her accrued balance in the plan is as follows. $\begin{array}{lr}
\text { Employer's contribution } & \$ 1,300,000 \
\text { Sophia's contribution } & 800,000 \
\text { Income earned by plan } & 900,000
\end{array}$ Sophia also was covered by her employer's group term life insurance program. Her policy maturity value of
$100,000) is made payable to Aiden Sophia's husband). Aiden also is the designated beneficiary of the pension plan. 
a. Regarding these assets, how much is included in Sophia's gross estate?
b. In Sophia's taxable estate?
c. How much gross income must Aiden recognize, when collecting on these items?

Accepted Answer

The answer of At the time of her death, Sophia...

Question 5

A father wants to give a parcel of land to his two children. If he wants the survivor to have sole ownership, he should list ownership of the property as joint tenants.

Accepted Answer

A) True 
 B)False

Question 6

For both the Federal gift and estate taxes, a deduction is allowed for certain transfers to a spouse.

Accepted Answer

A) True 
 B)False

Question 7

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 8

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

Accepted Answer

A)  He established an irrevocable trust, income payable to himself for life and, upon his death, remainder to his children. 
B)  He dies owning a U.S. savings bond with ownership listed as: "Trent, payable to Sue on Trent's death." Sue redeems the bond. 
C)  He sends $25,000 to Alice's oral surgeon in payment of her dental implants. Alice is Trent's sister and does not qualify as his dependent. 
D)  He pays Eva $800,000 in a property settlement of her marital rights. One month later, Trent and Eva are divorced.

Question 9

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 10

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 11

Ray purchases U.S. savings bonds that 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.

Accepted Answer

A) True 
 B)False

Question 12

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 13

In determining whether a dividend issued on stock held by a decedent is included in the gross estate, the record date
rather than the declaration or payment dates) controls.

Accepted Answer

A) True 
 B)False

Question 14

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 15

At the time of her death, Emma still owed $36,000 on her church pledge for the year. Because church pledges are not an enforceable obligation in the state where Emma resided, her estate cannot claim a deduction for the $36,000 that it owes and later pays.

Accepted Answer

A) True 
 B)False

Question 16

Walt dies intestate i.e., without a will) in the current year with a gross estate valued at $4,000,000. Under applicable state law, Walt's property passes to Kelly and to Belle in that order. Kelly has an estimated net worth of $3,000,000 while Belle's is zero. From a tax planning standpoint, what course of action might be advisable?

Accepted Answer

The answer of Walt dies intestate i.e., without a will)...

Question 17

At the time of her death, Amber owns property worth $5,000,000. Other information regarding her affairs is as follows. $\begin{array}{lr}
\text { Unpaid pledge to the building fund of her church } & \$ 50,000 \
\text { College graduation gift she had promised her grandson } & 20,000 \
\text { Local property taxes owed (accrued prior to death) } & 100,000 \
\text { Mortgage owed on personal residence } & 800,000
\end{array}$
All of these items were paid by her estate, and none were deducted on Form 1041 income tax return of the estate). What is Amber's taxable estate?

Accepted Answer

The answer of At the time of her death, Amber...

Question 18

Barry pays State University for his daughter's room and board. Barry has made a transfer that is subject to the
Federal gift tax.

Accepted Answer

A) True 
 B)False

Question 19

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 20

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...

Exam 18: The Federal Gift and Estate Taxes

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

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.

A father wants to give a parcel of land to his two children. If he wants the survivor to have sole ownership, he should list ownership of the property as joint tenants.

For both the Federal gift and estate taxes, a deduction is allowed for certain transfers to a spouse.

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

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

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.

Ray purchases U.S. savings bonds that 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.

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.

In determining whether a dividend issued on stock held by a decedent is included in the gross estate, the record date rather than the declaration or payment dates) controls.

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.

At the time of her death, Emma still owed $36,000 on her church pledge for the year. Because church pledges are not an enforceable obligation in the state where Emma resided, her estate cannot claim a deduction for the $36,000 that it owes and later pays.

Barry pays State University for his daughter's room and board. Barry has made a transfer that is subject to the Federal gift tax.

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.

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?