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Exam 18: The Federal Gift and Estate Taxes

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Question 111

Multiple Choice

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Which, if any, of the following items is subject to indexation (adjusted to reflect inflation) ?

A) The election to split gifts under § 2513.
B) The limitation placed on the amount allowed as a charitable contribution for estate tax purposes (§ 2055) .
C) Annual exclusion.
D) Unified transfer tax rates.
E) None of the above.

F) A) and C)
G) C) and D)

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Question 112

True/False

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In 2011 and with $100,000, Ronald establishes a joint savings account with his cousin, Allison. In 2013, Allison withdraws the $100,000 and disappears. Ronald made a gift to Allison in 2013.

A) True
B) False

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Question 113

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Classify each of the independent statements appearing below. a. Some or all of the interest included in the decedent's gross estate. b. None of the interest included in the decedent's gross estate. -Dower interest claimed by decedent's surviving spouse.

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.

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

By his will, all of Rusty's property passes outright to his wife, Patsy. As Patsy was not given a general power of appointment or Rusty's executor did not make a QTIP election, Rusty's estate is not allowed a marital deduction.

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).

Sam purchases a U.S. savings bond which he registers as follows: "Sam, payable to Don upon Sam's death." A gift occurs when Sam purchases the bond.

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

Pursuant to Corey's will, Emma (Corey's sister) inherits his property. Emma dies later. The estate tax attributable to the inclusion of the property in Corey's gross estate was $300,000. The estate tax attributable to the inclusion of the property in Emma's gross estate is $400,000. Emma's credit for the tax on prior transfers (under § 2013) is:

In some cases, the Federal gift tax can be imposed on someone other than the donor.

A Federal gift tax return does not have to be filed if no gift tax is payable.

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 or to Belle, in that order. Kelly has an estimated net worth of $3,000,000 while Belle has none. From a tax planning standpoint, what course of action might be advisable.

In his will, Hernando provides for $50,000 to go to the Madrid, Spain, school system. Because it is a foreign charity, the bequest will not qualify as a charitable deduction for estate tax purposes.

Classify each of the independent statements appearing below. a. Some or all of the interest included in the decedent's gross estate. b. None of the interest included in the decedent's gross estate. -Surviving spouse's share of the community property.

Andrea dies on April 30, 2013. Which, if any, of the following items is included in her gross estate?

Stacey inherits unimproved land (fair market value of $6 million) from her father on June 1, 2012. Stacey disclaims her interest in the property as follows: one-third on December 1, 2012; one-third on January 3, 2013; and the remaining one-third on May 31, 2013. In all cases, the disclaimers pass the interest to her son (the next heir under state law) . The Federal gift tax applies to Stacey for:

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

A transfer in trust in which the trustee has the power to accumulate income is not a gift of a future interest if the trustee never exercises the power.

Two brothers, Sam and Bob, acquire real estate as equal tenants in common. Of the purchase price of $200,000, Sam furnished $80,000 while Bob provided the balance. If Sam dies first ten years later when the real estate is worth $600,000, his estate includes $240,000 as to the property.