Question 1

For Federal estate and gift tax purposes,the exclusion amount is not the same thing as the bypass amount.

Accepted Answer

A) True 
 B)False

Question 2

At the time of her death in 2012,Chloe was involved in three trust arrangements.Details regarding these trusts are summarized below.
  As to these trusts,how much will be included in Chloe's gross estate?

Accepted Answer

The answer of At the time of her death in...

Question 3

In which,if any,of the following independent situations has Fred made a gift?

Accepted Answer

A) Fred established a revocable trust,income payable to himself for life and,upon his death,remainder to his children. 
B) Fred dies owning a U.S.savings bond with ownership listed as: "Fred,payable to Sue on Fred's death." Sue redeems the bond. 
C) Fred sends $25,000 to Alice's oral surgeon in payment of her dental implants.Alice is Fred's sister and does not qualify as his dependent. 
D) Fred pays Eva $800,000 in a property settlement of her marital rights.One month later Fred and Eva are divorced. 
E) None of the above.

Question 4

Lila is the owner and beneficiary of a policy on the life of her husband,Austin.Upon Austin's prior death,the insurance proceeds paid to Lila qualifies for the marital deduction.

Accepted Answer

A) True 
 B)False

Question 5

Which,if any,of the following is a correct statement regarding the filing of a gift tax return (Form 709)?

Accepted Answer

A) A donor must file a Form 709 in the same year in which the gift was made. 
B) The due date of a Form 709 is the same as the due date of the donor's Form 1040. 
C) A Form 709 may have to be filed even though the value of the gift was less than the amount of the annual exclusion. 
D) Melody gives her husband a new Mercedes convertible for his birthday.Melody must file a Form 709 to report the gift even though no gift tax results. 
E) None of the above.

Question 6

Sally's will passes real estate to Otto (her surviving spouse).The real estate is worth $800,000 but is subject to a mortgage of $200,000.The transfer provides Sally's estate with a marital deduction of $600,000.

Accepted Answer

A) True 
 B)False

Question 7

If a donor has a fiscal year of July 1-June 30 for income tax purposes,this does not change the normal filing date for Form 709.

Accepted Answer

A) True 
 B)False

Question 8

In which,if any,of the following independent situations can the alternate valuation date be elected? Value of Gross Estate Estate Tax Result
Date of Alternate Date of Alternate
Death Date Death Date

Accepted Answer

A) $6,000,000 $6,100,000 $400,000 $390,000 
B) $5,900,000 $5,800,000 $400,000 $405,000 
C) $6,100,000 $6,000,000 $390,000 $380,000 
D) $6,200,000 $6,300,000 $500,000 $490,000 
E) None of the above

Question 9

When Travis learns he is seriously ill,he transfers an insurance policy on his life (maturity value of $2,000,000)to his wife Alexis.The couple's adult children are the designated beneficiaries of the policy.Has Travis acted wisely?

Accepted Answer

The answer of When Travis learns he is seriously ill,he...

Question 10

At the time of his death,Gene held a Roth IRA account with his wife as the designated beneficiary.The IRA is included in Gene's gross estate.

Accepted Answer

A) True 
 B)False

Question 11

Eric dies at age 96 and is survived by his third wife,Monique (age 22),and a granddaughter,Paula (age 50).Eric's will divides his $11 million estate between these two survivors.Both of these transfers are subject to the generation skipping transfer tax (GSTT).

Accepted Answer

A) True 
 B)False

Question 12

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 § 2032 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 13

Prior to his death in 2012,Ethan made the following taxable gifts.
  The policy on Ethan's life was given to the designated beneficiary.The gift of the stock and the land generated gift taxes of $28,750 and $65,250,respectively.
As to these transfers,how much is included in Ethan's gross estate?

Accepted Answer

The answer of Prior to his death in 2012,Ethan made...

Question 14

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

Accepted Answer

A) True 
 B)False

Question 15

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

Accepted Answer

A) True 
 B)False

Question 16

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 17

Lyle and Beatrice are brother and sister.Using his funds,Lyle purchases land,listing title as: "Lyle and Beatrice,joint tenants with right of survivorship." If Lyle dies first,all of the land is included in his gross estate.

Accepted Answer

A) True 
 B)False

Question 18

In 2011 and with $100,000,Ronald establishes a joint savings account with his cousin,Allison.In 2012,Allison withdraws the $100,000 and disappears.Ronald made a gift to Allison in 2012.

Accepted Answer

A) True 
 B)False

Question 19

In determining the Federal gift tax on a current gift:

Accepted Answer

A) Disregard taxable gifts made after 1976. 
B) Disregard taxable gifts made before 1977. 
C) Include all prior taxable gifts. 
D) Claim a credit only for the gift taxes actually paid. 
E) None of the above.

Question 20

Cary and Bo are husband and wife.Using their community funds,they create a trust,life estate to Bo,remainder to their children.Four years later,Bo predeceases Cary.Nothing as to this trust is included in Bo's gross estate.

Accepted Answer

A) True 
 B)False

Exam 18: The Federal Gift and Estate Taxes

For Federal estate and gift tax purposes,the exclusion amount is not the same thing as the bypass amount.

At the time of her death in 2012,Chloe was involved in three trust arrangements.Details regarding these trusts are summarized below. As to these trusts,how much will be included in Chloe's gross estate?

In which,if any,of the following independent situations has Fred made a gift?

Lila is the owner and beneficiary of a policy on the life of her husband,Austin.Upon Austin's prior death,the insurance proceeds paid to Lila qualifies for the marital deduction.

Which,if any,of the following is a correct statement regarding the filing of a gift tax return (Form 709) ?

Sally's will passes real estate to Otto (her surviving spouse).The real estate is worth $800,000 but is subject to a mortgage of $200,000.The transfer provides Sally's estate with a marital deduction of $600,000.

If a donor has a fiscal year of July 1-June 30 for income tax purposes,this does not change the normal filing date for Form 709.

In which,if any,of the following independent situations can the alternate valuation date be elected? Value of Gross Estate Estate Tax Result Date of Alternate Date of Alternate Death Date Death Date

When Travis learns he is seriously ill,he transfers an insurance policy on his life (maturity value of $2,000,000)to his wife Alexis.The couple's adult children are the designated beneficiaries of the policy.Has Travis acted wisely?

At the time of his death,Gene held a Roth IRA account with his wife as the designated beneficiary.The IRA is included in Gene's gross estate.

Eric dies at age 96 and is survived by his third wife,Monique (age 22),and a granddaughter,Paula (age 50).Eric's will divides his $11 million estate between these two survivors.Both of these transfers are subject to the generation skipping transfer tax (GSTT).

Prior to his death in 2012,Ethan made the following taxable gifts. The policy on Ethan's life was given to the designated beneficiary.The gift of the stock and the land generated gift taxes of $28,750 and $65,250,respectively. As to these transfers,how much is included in Ethan's gross estate?

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

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

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?

Lyle and Beatrice are brother and sister.Using his funds,Lyle purchases land,listing title as: "Lyle and Beatrice,joint tenants with right of survivorship." If Lyle dies first,all of the land is included in his gross estate.

In 2011 and with $100,000,Ronald establishes a joint savings account with his cousin,Allison.In 2012,Allison withdraws the $100,000 and disappears.Ronald made a gift to Allison in 2012.

In determining the Federal gift tax on a current gift:

Cary and Bo are husband and wife.Using their community funds,they create a trust,life estate to Bo,remainder to their children.Four years later,Bo predeceases Cary.Nothing as to this trust is included in Bo's gross estate.