EA Unit 18: Estate and Gift Taxes

In which case must a gift tax return be filed?

A married couple gives a gift of $25,000 to a related person.

Which of the following statements concerning the deceased spousal unused exclusion (DSUE) is correct?

A portability election can only be made by filing Form 706.

Which of the following is not income in respect of a decedent (IRD)?

A royalty check that was received before death but not cashed.

Duncan died in 2018. Following his death, the executor of his estate paid the following bills. Which of these is not an allowable deduction in determining Duncan's taxable estate?

Alimony paid after the taxpayer's death.

Alana had gifts totaling $48,000 in 2018 that were subject to gift tax. When is her gift tax return due?

April 15, 2019.

Eileen's aunt gives her a gift of a future interest on her estate. Eileen will have full use of the estate after her aunt dies. Which is the correct statement about this gift?

Eileen's aunt cannot use the annual gift tax exclusion for this gift.

The executor of Ophelia's estate is her sister, Elise, Elise decides to make a distribution of 100% of the estate's assets before paying the estate's income tax liability. Which of the following statements is correct?

Elise and the beneficiaries can be held liable for the tax debt, up to the value of the assets distributed.

A taxpayer dies on May 4, 2018. Assuming that Form 706 needs to be filed for his estate, when is his estate tax return due?

February 4, 2019.

Which of the following items is not an allowable deduction from the gross estate?

Federal estate tax.

Delia's estate has funeral expenses for the cost of her burial. How should the executor deduct these costs?

Funeral expenses are deducted on Form 706.

In 2018, Jeffrey gives $26,000 to his girlfriend, Rachiel. Which of the following statements is correct?

Jeffrey is required to file a gift tax return, Form 709.

Janna is the executor for her father's estate. He died on November 5, 2018. Which of the following dates may she elect to use as an alternate valuation date for his estate?

May 5, 2019.

When is an estate tax return due?

Nine months after the date of death.

Shawn, a single taxpayer,m has never been required to file a gift tax return. In 2018, Shawn gave the following gifts: [Tuition paid directly to a state university for an unrelated person: $18,000, Payment to General Hospital for his brother's medical bills: $15,500. Cash donations paid to his city's homeless shelter, a qualified 501(c)(3) organization: $50,000, Gift paid to the Libertarian Party (not a qualified 501(c)(3) charity: $25,000]. Is Shawn required to file a gift tax return for 2018?

No.

Cash inheritances are generally:

Not taxable to the beneficiary.

Maximo dies on May 1, 2018, and leaves his entire estate to his wife, Jeanne, a US citizen. The estate is valued at $50 million on the date of his death. What amount of tax must Jeanne pay on her husband's estate in 2018?

$0.

Phil is unmarried and died in 2018. At the time of his death, he had assets of $10 million and owed debts of $500,000. He also had a life insurance policy in place that paid $1 million to his only child. He had not used any of his basic exclusion amount during his lifetime. Bases upon the information provided, What is the taxable amount of Phil's estate that must be reported on Form 706?

$0.

Roberto and Sybil owned business property that they purchases for $100,000. They were joint tenants with right of survivorship. Each paid one-half of the purchase price. They took depreciation deductions prior to Sybil's death of $40,000. Under local law, each had a one-half interest in the income form the property. At the time of Sybil's death, the fair market value of the property was $200,00, one-half of which is includible in Sybil's estate. What is Roberto's basis in the property after Sybil's death?

$130,000.

Leighton received 100 shares of stock as an inheritance from her brother, who died on January 6, 2018. Her brother's adjusted basis in the stock was $14,750. The stock's fair market value on the date of her brother's death was $26,200. The executor of the estate elects the alternate value had dropped to $23,100. Leighton finally received the stock on August 26, 2018, when its fair market value was $23,500. She sold the stock a week later for $23,450. What is Leighton's basis in the inherited stock, in order to determine her taxable again on the sale?

$23,100.

All of the following gifts are excluded from the determination of the gift tax except:

A cash gift given to a non resident alien spouse of a US citizen.

Sandy and Matthew are married and have combined assets of $13 million. They are both US citizens. On May 10, 2018, Sandy dies. The FMV of Sandy's estate is $5 million on the date of her death. Matthew is the executor of his wife's estate and her sole beneficiary. Since the value of Sandy's estate was below $11.18 million threshold, Matthew decides not to file an estate tax return, and he declines to take the portability election. What future impact does this have on Matthew, the surviving spouse?

Since Matthew declined to file an estate tax return, he did not elect portability. There will be estate tax due upon Matthew's death, assuming that the value of his assets does not decline, and there will be no deductions for estate tax purposes.

Emma's father dies during the year. Emma is the sole beneficiary of her father's traditional IRA. Emma is 46 year old when she takes possession of her father's IRA. Which of the following statements is correct about the distributions from the inherited IRA account?

The distributions are taxable to Emma but not subject to an early withdrawal penalty.

In general who is responsible for paying gift tax?

The donor.

All of the following tax returns may include income in respect of a decedent (IRD) except:

The final Form 1040 for the decedent.

Bruno pays $19,000 of college tuition for his niece, Delia, directly to her college. Which of the following statements is correct?

The gifts is not taxable, and no gift tax return is required.

Karlotta died in 2018. Which of the following assets would not be included in the calculation of her gross estate?

The value of property transferred to Karlotta's son five years before her death.

Which of the following statements is incorrect regarding a married couple that uses gift splitting?

They must file a joint gift tax return along with their annual return (Form 1040).