Question 1

Classify each of the independent statements appearing below.
-Interest on municipal bonds accrued after death.

Accepted Answer

A)  Some or all of the asset is included in the decedent's gross estate.
B)  None of the asset is included in the decedent's gross estate.C) A) and B)
D) undefined

Question 2

For Federal estate tax purposes,the gross estate does not include property that will pass to a surviving spouse.

Accepted Answer

A) True 
 B)False

Question 3

Classify each statement appearing below.
-Homer purchases a U.S.savings bond listing title as: "Homer,payable to Bernice upon Homer's death." Bernice is Homer's sister.

Accepted Answer

A)  No taxable transfer occurs
B)  Gift tax applies
C)  Estate tax appliesD) A) and B)
E) None of the above

Question 4

Concerning the Federal estate tax deduction for asset transfers to charity:

Accepted Answer

A)  The deduction is allowed only if the decedent had a valid will.
B)  A deduction is allowed for a gift to the cemetery association.
C)  A deduction is disallowed if the gift is made to the United Way of Bosnia.
D)  All of the above statements are true.E) B) and C)
F) A) and C)

Question 5

At the time of his death,Tom owned some common stock.
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If the alternate valuation date is properly elected,the value of Tom's estate as to these stocks is:

Accepted Answer

A)  $2,300,000.
B)  $2,400,000.
C)  $2,500,000.
D)  $2,700,000.E) A) and B)
F) A) and C) C

Question 6

At the time of her death in an automobile accident,Laura left a modest probate estate,most of which she had inherited from her mother several years ago.Comment on Laura's Federal estate tax position in connection with each of the following points.
a.Probate estate versus gross estate.
b.Credit for the tax on prior transfers.

Accepted Answer

The answer of At the time of her death in...

Question 7

Using his separate funds,Wilbur purchases an annuity which 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.

Accepted Answer

A) True 
 B)False

Question 8

Classify each statement appearing below.
-Using his own funds,Horace establishes a savings account designating ownership as follows: "Horace and Nadine as joint tenants with right of survivorship." Horace predeceases Nadine.

Accepted Answer

A)  No taxable transfer occurs
B)  Gift tax applies
C)  Estate tax appliesD) A) and C)
E) A) and B)

Question 9

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

Accepted Answer

A) True 
 B)False

Question 10

Kim,a resident and citizen of Korea,dies during an operation at the Mayo Clinic in Rochester (MN).Because Kim died in the U.S.,she will be subject to the Federal estate tax.

Accepted Answer

A) True 
 B)False

Question 11

At the time of Dylan's death,he was a resident of the United States.He owns land located in a foreign country,which is subject to that country's estate tax.This same land also can be subject to the Federal estate tax.

Accepted Answer

A) True 
 B)False  True

Question 12

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

Accepted Answer

A) True 
 B)False

Question 13

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

Accepted Answer

A)  A foreign tax credit is available.
B)  A credit for tax on prior transfers may be available.
C)  A charitable deduction is available.
D)  All of the above.E) C) and D)
F) All of the above

Question 14

Walt dies intestate (i.e.,without a will) in the current year with a gross estate valued at $4,000,000.Under applicable state law,Walt's property passes to Kelly or to Belle,in that order.Kelly has an estimated net worth of $3,000,000 while Belle's is zero.From a tax planning standpoint,what course of action might be advisable?

Accepted Answer

This might be a good situation to make use of § 2518.Thus,Kelly could disclaim some of the $4,000,000 inheritance and,in effect,pass it to Belle free of any transfer tax to Kelly (i.e.,estate or gift tax).This presumes that Kelly would otherwise transfer some of her wealth to Belle in the future in a taxable transfer.

Question 15

Setting up a trust to benefit a minor can:

Accepted Answer

A)  Gain an annual exclusion even though no present interest is conveyed.
B)  Protect the donor against the minor's unwise use of the funds.
C)  Accumulate income for future use, like college tuition.
D)  All of the above.E) B) and C)
F) A) and D)

Question 16

Concerning the election to split gifts,which of the following statements is incorrect?

Accepted Answer

A)  The election can be made even if the parties are not married for the entire year of the gift.
B)  The election doubles the number of annual exclusions available.
C)  The election has no utility in a community property jurisdiction.
D)  The election can be made even if the parties are divorced as long as neither spouse has remarried by the end of the year.E) B) and D)
F) All of the above

Question 17

At the time of his death,Jason was a participant in Silver Corporation's qualified pension plan and group term life insurance.The balance of the survivorship feature in his pension plan is:
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The term insurance has a maturity value of $100,000.All amounts are paid to Pam,Jason's daughter.One result of these transactions is:

Accepted Answer

A)  Pam must pay income tax on $300,000.
B)  Pam must pay income tax on $1,100,000.
C)  Jason's gross estate must include $1,200,000.
D)  Jason's gross estate must include $1,500,000.E) C) and D)
F) A) and B)

Question 18

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

Accepted Answer

A) True 
 B)False

Question 19

Paul,a U.S.citizen,will avoid the Federal estate tax if he becomes a Canadian resident and owns no property located in the U.S.at the time of his death.

Accepted Answer

A) True 
 B)False

Question 20

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:

Accepted Answer

A)  $0 if Emma died 9 1/2 years after Corey.
B)  $300,000 if Emma died 3 years after Corey.
C)  $400,000 if Emma died 1 year after Corey.
D)  $240,000 if Emma died 5 1/2 years after Corey.
E)  The credit as computed is some other amount.F) B) and E)
G) A) and C)

Exam 27: The Federal Gift and Estate Taxes

Classify each of the independent statements appearing below. -Interest on municipal bonds accrued after death.

Correct Answer
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For Federal estate tax purposes,the gross estate does not include property that will pass to a surviving spouse.

Correct Answer
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Classify each statement appearing below. -Homer purchases a U.S.savings bond listing title as: "Homer,payable to Bernice upon Homer's death." Bernice is Homer's sister.

Correct Answer
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Concerning the Federal estate tax deduction for asset transfers to charity:

Correct Answer
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At the time of his death,Tom owned some common stock. If the alternate valuation date is properly elected,the value of Tom's estate as to these stocks is:

Correct Answer
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C

Correct Answer
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Using his separate funds,Wilbur purchases an annuity which 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.

Correct Answer
verified

Classify each statement appearing below. -Using his own funds,Horace establishes a savings account designating ownership as follows: "Horace and Nadine as joint tenants with right of survivorship." Horace predeceases Nadine.

Correct Answer
verified

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

Correct Answer
verified

Kim,a resident and citizen of Korea,dies during an operation at the Mayo Clinic in Rochester (MN).Because Kim died in the U.S.,she will be subject to the Federal estate tax.

Correct Answer
verified

At the time of Dylan's death,he was a resident of the United States.He owns land located in a foreign country,which is subject to that country's estate tax.This same land also can be subject to the Federal estate tax.

Correct Answer
verified
True

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

Correct Answer
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Which,if any,of the following is not a characteristic of the Federal estate tax?

Correct Answer
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Setting up a trust to benefit a minor can:

Correct Answer
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Concerning the election to split gifts,which of the following statements is incorrect?

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

Correct Answer
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Paul,a U.S.citizen,will avoid the Federal estate tax if he becomes a Canadian resident and owns no property located in the U.S.at the time of his death.

Correct Answer
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Correct Answer
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Exam 27: The Federal Gift and Estate Taxes

Classify each of the independent statements appearing below. -Interest on municipal bonds accrued after death.

Correct AnswerverifiedShow Answer

For Federal estate tax purposes,the gross estate does not include property that will pass to a surviving spouse.

Correct AnswerverifiedShow Answer

Classify each statement appearing below. -Homer purchases a U.S.savings bond listing title as: "Homer,payable to Bernice upon Homer's death." Bernice is Homer's sister.

Correct AnswerverifiedShow Answer

Concerning the Federal estate tax deduction for asset transfers to charity:

Correct AnswerverifiedShow Answer

At the time of his death,Tom owned some common stock. ​ If the alternate valuation date is properly elected,the value of Tom's estate as to these stocks is:

Correct AnswerverifiedC

Correct AnswerverifiedShow Answer

Using his separate funds,Wilbur purchases an annuity which 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.

Correct AnswerverifiedShow Answer

Classify each statement appearing below. -Using his own funds,Horace establishes a savings account designating ownership as follows: "Horace and Nadine as joint tenants with right of survivorship." Horace predeceases Nadine.

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Kim,a resident and citizen of Korea,dies during an operation at the Mayo Clinic in Rochester (MN).Because Kim died in the U.S.,she will be subject to the Federal estate tax.

Correct AnswerverifiedShow Answer

At the time of Dylan's death,he was a resident of the United States.He owns land located in a foreign country,which is subject to that country's estate tax.This same land also can be subject to the Federal estate tax.

Correct AnswerverifiedTrue

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Setting up a trust to benefit a minor can:

Correct AnswerverifiedShow Answer

Concerning the election to split gifts,which of the following statements is incorrect?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Paul,a U.S.citizen,will avoid the Federal estate tax if he becomes a Canadian resident and owns no property located in the U.S.at the time of his death.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

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At the time of his death,Tom owned some common stock. If the alternate valuation date is properly elected,the value of Tom's estate as to these stocks is:

Correct Answer
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C

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True

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