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Exam 27: The Federal Gift and Estate Taxes

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Question 41

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A lifetime transfer that is supported by full and adequate consideration is not a gift.

A) True
B) False

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Question 42

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June made taxable gifts as follows: $400,000 in 1973,$200,000 in 1977,$600,000 in 1985,and $700,000 in 2001.In 2011,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:

A) $4,000,000.
B) $4,500,000.
C) $5,300,000.
D) $5,500,000.
E) None of the above.

F) A) and B)
G) None of the above

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Question 43

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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 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 will be allowed no marital deduction as to the property.

In 2011,grandparents contribute jointly owned funds to a § 529 qualified tuition plan on behalf of their granddaughter.The maximum annual exclusion allowed to them is $130,000 ($26,000 ´ 5 years).

One of the reasons the estate tax was enacted was to prevent the avoidance of the gift tax by the making of "deathbed gifts."

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.

Which,if any,of the following is not a characteristic of the Federal gift tax?

At the time of her death in 2011,Ruby was involved in three trust arrangements.Details regarding these trusts are summarized below. As to these trusts,how much will be included in Ruby's gross estate?

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

Which of the following is not a characteristic of both the Federal gift tax and the Federal estate tax?

At the time of his death,Norton was involved in the following transactions. What amount is included in Norton's gross estate?

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

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.

At the time of his death on August 7,2011,Michael owned the following assets. How much,as to these transactions,is included in Michael's gross estate?

If a donor has a fiscal year of July 1-June 30 for income tax purposes,this changes the normal filing date for Form 709.

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.

As a result of an auto accident from which she later died,Irene totaled a Bentley worth $95,000.If the insurance company covers $60,000 of the loss,Irene's estate can claim a deduction of $35,000 in arriving at the taxable estate.

In most cases,the gross estate of a decedent is larger than the probate estate.

When Travis learns he is seriously ill,he transfers an insurance policy on his life (maturity value of $2,000,000)to his wife Alexis.The couple's adult children are the designated beneficiaries of the policy.Has Travis acted wisely?