Question 1

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 2

Sometimes also known as transaction taxes,Federal gift and estate taxes are excise taxes.

Accepted Answer

A) True 
 B)False

Question 3

In arriving at the taxable estate,expenses incurred in administering community property are deductible only in proportion to the deceased spouse's interest in the community.

Accepted Answer

A) True 
 B)False

Question 4

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,Cary predeceases Bo.Nothing as to this trust is included in Cary's gross estate.

Accepted Answer

A) True 
 B)False

Question 5

At the time of her death in 2009,Emma still owed $36,000 on her church pledge for the year.If church pledges are not an enforceable obligation in the state where Emma resided,her estate cannot claim a deduction for the $36,000 it later pays.

Accepted Answer

A) True 
 B)False

Question 6

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 7

Using his separate funds,Wilbur purchases an annuity which pays him a specified amount until death.Upon Wilbur's prior death,a reduced amount is to be paid to Marcia for her life.Wilbur predeceases Marcia.Nothing concerning the annuity contract is included in Wilbur's gross estate.

Accepted Answer

A) True 
 B)False

Question 8

An estate tax is a tax on the right of an heir to receive property on the death of the owner.

Accepted Answer

A) True 
 B)False

Question 9

Reba purchases U.S.savings bonds which she lists in the name of Rod,Reba's son.The purchase of the bonds does not constitute a gift.

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) Can be elected even though no estate tax return has to be filed. 
C) 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. 
E) None of the above.

Question 11

A timely issued disclaimer by an heir transfers the property to someone else without a Federal gift tax result.

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

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

Accepted Answer

A) The generation-skipping transfer tax may apply. 
B) A charitable deduction is available. 
C) A marital deduction is available. 
D) A deduction for state death taxes may be available. 
E) An exclusion amount is available in computing the tax.

Question 14

Mitch pays the surgeon and the hospital for his aunt's gall bladder operation.If the aunt is not Mitch's dependent,the transfer is subject to the gift tax.

Accepted Answer

A) True 
 B)False

Question 15

In 1985,Thalia purchases land for $900,000 and lists title in the names of her daughters as follows: "April and Theresa,joint tenants with right of survivorship." In 1990,April and Theresa purchase an apartment building for $1 million as equal tenants in common;April furnished $400,000 and Theresa furnished $600,000 of the cost.In the current year,April dies first in 2009 when the land is worth $1.5 million and the apartment building is worth $2 million.One of the results of these transactions is:

Accepted Answer

A) April made a gift to Theresa of $100,000 in 1990. 
B) None of the land is included in April's gross estate. 
C) April's gross estate includes $800,000 (40% * $2 million)as to the apartment building. 
D) April's gross estate includes $1,750,000 as to these properties. 
E) None of the above.

Question 16

At the time of his death,Norton was involved in the following transactions.  What amount is included in Norton's gross estate?

Accepted Answer

A) $800,000. 
B) $1,100,000. 
C) $1,200,000. 
D) $1,700,000 
E) None of the above.

Question 17

Which of the following statements relating to the Federal gift tax is incorrect?

Accepted Answer

A) The deemed paid credit allowed for a prior taxable gift will always exceed the gift tax that was actually paid. 
B) The issuance of an effective disclaimer by an heir will pass the property to another without being subject to the Federal gift tax. 
C) The annual exclusion is not available for gifts of future interests. 
D) Up to 5 years of annual exclusions can be available for gifts involving § 529 plans (qualified tuition programs). 
E) None of the above.

Question 18

Martha inherits unimproved land (fair market value of $3 million)from her father on June 1,2008.Martha disclaims her interest in the property as follows: one-third on December 1,2008;one-third on January 1,2009;and the remaining one-third on May 31,2009.In all cases,the disclaimers pass the interest to her son (the next heir under state law).The Federal gift tax applies to Martha for:

Accepted Answer

A) All of the disclaimers. 
B) The disclaimer made in 2008. 
C) The disclaimers made in 2009. 
D) The May 31,2009 disclaimer. 
E) None of the disclaimers.

Question 19

In community property states,all property acquired after marriage by either spouse is community property.

Accepted Answer

A) True 
 B)False

Question 20

At the time of his death,Jason was a participant in Silver Corporation's qualified pension plan and group term life insurance.The balance in his pension plan is:  The term insurance has a maturity value of $100,000.All amounts are paid to Pam,Jason's daughter.One result of these transactions is:

Accepted Answer

A) Pam must pay income tax on $300,000. 
B) Pam must pay income tax on $1,100,000. 
C) Jason's gross estate must include $1,100,000. 
D) Jason's gross estate must include $1,500,000. 
E) None of the above.

Exam 27: The Federal Gift and Estate Taxes

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.

Sometimes also known as transaction taxes,Federal gift and estate taxes are excise taxes.

In arriving at the taxable estate,expenses incurred in administering community property are deductible only in proportion to the deceased spouse's interest in the community.

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,Cary predeceases Bo.Nothing as to this trust is included in Cary's gross estate.

At the time of her death in 2009,Emma still owed $36,000 on her church pledge for the year.If church pledges are not an enforceable obligation in the state where Emma resided,her estate cannot claim a deduction for the $36,000 it later pays.

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.

Using his separate funds,Wilbur purchases an annuity which pays him a specified amount until death.Upon Wilbur's prior death,a reduced amount is to be paid to Marcia for her life.Wilbur predeceases Marcia.Nothing concerning the annuity contract is included in Wilbur's gross estate.

An estate tax is a tax on the right of an heir to receive property on the death of the owner.

Reba purchases U.S.savings bonds which she lists in the name of Rod,Reba's son.The purchase of the bonds does not constitute a gift.

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

A timely issued disclaimer by an heir transfers the property to someone else without a Federal gift tax result.

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

Mitch pays the surgeon and the hospital for his aunt's gall bladder operation.If the aunt is not Mitch's dependent,the transfer is subject to the gift tax.

At the time of his death,Norton was involved in the following transactions. What amount is included in Norton's gross estate?

Which of the following statements relating to the Federal gift tax is incorrect?

In community property states,all property acquired after marriage by either spouse is community property.

At the time of his death,Jason was a participant in Silver Corporation's qualified pension plan and group term life insurance.The balance in his pension plan is: The term insurance has a maturity value of $100,000.All amounts are paid to Pam,Jason's daughter.One result of these transactions is: