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Exam 27: The Federal Gift and Estate Taxes

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Question 1

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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.

A) True
B) False

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Question 2

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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 qualify for the marital deduction.

A) True
B) False

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Question 3

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The deemed paid credit allowed for past taxable gifts can be more than the tax actually paid.

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

For Federal estate tax purposes,the gross estate of a decedent may include property he or she does not own.

At the time of her death on October 3,2009,Kaitlyn was involved in the following transactions. As to these transactions,Kaitlyn's gross estate includes:

At the time of her death in 2009,Heather was involved in three trust arrangements.Details regarding these trusts are summarized below. As to these trusts,how much will be included in Heather's gross estate?

The purpose of the marital deduction is to place married decedents in common law states on par with those in community property jurisdictions.

At the time of his prior death,Raul owned a residence with his wife,Manuela,as tenants by the entirety.The residence was purchased by Manuela ten years ago at a cost of $300,000 and has a fair market value of $1.4 million.Raul's estate should be allowed no marital deduction as to the property.

In 1990,Ethan and Andrea acquire realty for $1 million,with Ethan furnishing $300,000 of the purchase price and Andrea providing the balance.Title to the property is listed as: "Ethan and Andrea,joint tenants with right of survivorship." In 2009,Ethan dies first when the realty is worth $3 million.How much is included in his gross estate under the following circumstances?

José,a citizen and resident of Panama,makes a gift of ExxonMobil stock to his children.Because ExxonMobil is a U.S.corporation,José will be subject to the U.S.Federal gift tax.

At one point,the tax rates applicable to transfers by gift were lower than those applying to transfers by death.

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

In what manner does the tax law favor contributions to qualified tuition plans under § 529?

Joint tenancies and tenancies by the entirety avoid probate,while tenancies in common and community property do not.Why?

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.

In a § 2503(c)trust for minors,the trustee can be given the power to accumulate income without the gift violating the future interest rule.

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 2009 when the trust is worth $2,000,000.Which,if any,of the following is a correct statement?

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

Frank owns an insurance policy on the life of Cynthia,with Leon as the designated beneficiary.Upon Cynthia's prior death,Frank is treated as making a gift of the insurance proceeds to Leon.