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Exam 27: The Federal Gift and Estate Taxes

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Question 51

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Murray owns an insurance policy on the life of his father, Logan. Upon Logan's death, the policy proceeds of $2,000,000 are paid to the designated beneficiary, Grace. What are the transfer tax consequences resulting from Logan's death based on the following independent assumptions? a. Grace is Murray's daughter. b. Grace is Murray's wife. c. What are the tax consequences if Murray dies before both Grace and Logan)?

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a. Murray has made a gift to Grace of $2...

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Question 52

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

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 53

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Classify each statement appropriately. -Payment of unpaid gift taxes.

Classify each of the following statements: -Harry pays for the tuition for his niece to attend Derrick University. The niece does not qualify as Harry's dependent.

Barry pays State University for his daughter's room and board. Barry has made a transfer that is subject to the Federal gift tax.

At the time of his death, Raul owned a residence with his wife, Manuela, as joint tenants. Manuela purchased the residence 10 years ago at a cost of $300,000; it now has a fair market value of $1.4 million. Raul's estate will be allowed no marital deduction as to the property.

Pursuant to Corey's will, Emma (Corey's sister) inherits his property. Emma dies in a later tax year. 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 is:

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

Classify each of the following independent statements:. -Cash dividends on stock owned by the decedent (declaration and record dates preceded death but payment date was after death) .

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

Under the alternate valuation date election, each asset in the gross estate is valued at the lesser of the date of death value or six months thereafter.

Concerning the Federal estate tax deduction for asset transfers to a surviving spouse:

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

In which, if any, of the following independent situations can the alternate valuation date be elected? $\begin{array}{cccc}&\text {Value of Gross Estate }&&\text {Estate Tax Result }\\&\text { Date of Death } & \text { Alternate Date } & \text { Date of Death } & \text { Alternate D } \\a.& \$ 6,000,000 & \$ 6,100,000 & \$ 400,000 & \$ 390,000 \\b.&\$ 5,900,000 & \$ 5,800,000 & \$ 400,000 & \$ 405,000 \\c.&\$ 6,100,000 & \$ 6,000,000 & \$ 390,000 & \$ 380,000 \\d.&\$ 6,200,000 & \$ 6,300,000 & \$ 500,000 & \$ 490,000\end{array}$

Sandy pays a local college for her boyfriend's tuition. The payment is subject to the Federal gift tax.

If the value of the gross estate is lower on the alternate valuation date than on the date of death, the date of death valuation cannot be used.

For both the Federal gift and estate taxes, a deduction is allowed for certain transfers to a spouse.

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

Classify each of the following independent statements:. -Bank account held as joint tenant with mother. Mother provided all of the funds. Mother survives.

Matt and Patricia are husband and wife and live in Oregon. In 2010 and using her funds, Patricia purchased a residence for $400,000, listing title to the property as "Matt and Patricia, joint tenants with right of survivorship." In 2020, Matt dies before Patricia when the residence is worth $2 million. A correct statement as to these transactions is: