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Exam 27: The Federal Gift and Estate Taxes

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Question 61

Multiple Choice

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

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.

M) D) and I)
N) A) and D)

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Question 62

Multiple Choice

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Classify each statement appropriately. -State death tax imposed on the estate.

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.

C) A) and B)
D) undefined

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Question 63

Multiple Choice

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

Classify each statement appropriately. -Casualty loss to property before the death of the owner.

Classify each of the following statements. -Clarence pays the medical providers (e.g., physicians, hospital) for his aunt's knee replacement operation. The aunt does not qualify as Clarence's dependent.

At the time of her death on June 6, Mary owned the following assets. ∙ Taupe Corporation stock (cost $400,000, FMV $800,000). On May 4, Taupe declared a cash dividend, payable on June 15, to shareholders as of the record date of June 4. Mary's executor received the $40,000 dividend on the scheduled payment date. ∙ City of Boise bonds (cost $800,000, FMV $780,000). Interest accrued to June 6 was $42,000. The executor eventually collected $50,000 (included postdeath accrual of $8,000) on July 20. As to these transactions, how much is included in Mary's gross estate?

Classify each of the following statements: -Under her father's will, Faith is to receive 10,000 shares of GE common stock. Eight months after her father's death, Faith disclaims the 10,000 shares.

Iris dies intestate (i.e., without a will). All of her property passes to her heirs in accordance with the order of distribution prescribed under the Internal Revenue Code.

In 2015, Noah and Kelly acquired real estate for $2,000,000 with Noah furnishing $400,000 of the purchase price and Kelly providing the balance. Title to the property is listed as: "Noah and Kelly, equal tenants in common." Noah dies before Kelly in 2019 when the real estate is worth $4,000,000. a. Were there any tax consequences in 2015? Explain. a. and b. As to the real estate, how much is included in Noah's gross estate? b., would it make any difference whether Noah and Kelly are brother and sister or husband and wife? c. As to choices

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.

All charitable organizations that qualify for estate tax purposes also qualify for income tax purposes.

Classify each of the following independent statements:. -Land held as tenants by the entirety with surviving spouse. Decedent provided none of the funds.

The Federal unified transfer tax exclusion amount:

Match each statement with the correct choice. Some choices may be used more than once or not at all. -Election to split gifts

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?

What is the justification for the terminable interest rule that is applicable to the marital deduction? Give an example.

The amount of the exemption equivalent is the same for both transfers by gift and transfers by death.

In year 1 and with $100,000, Ronald establishes a joint savings account with his cousin, Allison. In year 2, Allison withdraws the $100,000 and leaves the country. Ronald made a gift to Allison in year 2.

Classify each of the following statements: -Hector transfers funds to his aunt so she can obtain a much needed hip operation. The aunt does not qualify as Hector's dependent.

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