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Exam 18: The Federal Gift and Estate Taxes

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Question 71

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For estate tax purposes,a surviving spouse's share of the community property is handled in the same manner as a surviving spouse's dower interest.

A) True
B) False

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Question 72

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Brad holds a life estate in a trust created by his father,while Scott holds a life estate in a trust created by himself.Upon their deaths,Scott must include the trust in his gross estate,while Brad need not include his trust.Why?

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Under the operation of § 2036,Scott has ...

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Question 73

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

In which of the following situations has a taxable gift occurred?

Sidney dies and leaves property to his sister Giselle.Thirteen months later,Giselle dies.Under § 2013 (credit for tax on prior transfers),Giselle's estate can claim a full credit for any Federal estate taxes paid by Sidney's estate as to amounts passing to Giselle.

Regarding the transfer tax credits available,which of the following statements is correct?

In determining the gift tax due on a current gift,a credit is allowed for gift taxes actually paid on prior taxable gifts.Comment on the accuracy of this statement.

June made taxable gifts as follows: $400,000 in 1973,$200,000 in 1977,$600,000 in 1985,and $700,000 in 2001.In 2012,June dies leaving a taxable estate of $4,000,000.June's tax base for applying the unified tax rate schedules (for estate tax purposes) is:

At the time of her death,Megan was involved in the following. As to these transactions,Megan's gross estate must include:

In 1985,Drew creates a trust with $1,000,000 of securities.Under the terms of the trust,Paula (Drew's wife) is granted a life estate with remainder to their children.Drew makes a QTIP election as to the trust.Drew dies in 1992 when the trust is worth $1,500,000,and Paula dies in 2012 when the trust is worth $2,000,000.Which,if any,of the following is a correct statement?

At the time of his death,Lance held a life estate in the LM Trust.Under which of the following circumstances will the LM Trust be included in his gross estate?

Some states impose inheritance taxes,but the Federal tax system does not.

What is the justification for the terminable interest rule that is applicable to the marital deduction?

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 Federal law.

To avoid the terminable interest limitation on the marital deduction,the surviving spouse must be granted a general power of appointment over the trust property,or a QTIP election must be made.

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

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

At the time of his death,Trent owned some common stock. The Aqua Corporation stock is sold by the executor of the estate five months after Trent's death for $1,300,000.If the alternate valuation date is properly elected,the value of Trent's estate as to these stocks is:

Even if the value of the gross estate is lower on the alternate valuation date than on the date of death,the alternate valuation need not be used.

For gift tax purposes,a property settlement in consideration of marriage (i.e. ,prenuptial agreement)is treated the same as a property settlement incident to a divorce.