Ch 18

Sam dies owning the City of Tampa bonds. On the date of his death, the bonds had a fair market value of $30,000. Interest accrued to the date of Sam's death is $900. Interest accrued after Sam's death is $300. What amount is included in his gross estate? a.$3 b.$30,900 c.$0 d.$30,300 e.$900

b.$30,900

Concerning the Federal estate tax deduction for asset transfers to a surviving spouse: a.A deduction is allowed for a transfer to a member of a same-sex civil union. b.A deduction is allowed for life insurance proceeds paid to a surviving spouse. c.The deduction is disallowed for transfers between same-sex spouses. d.All of these statements are true.

b.A deduction is allowed for life insurance proceeds paid to a surviving spouse.

Which, if any, of the following is not a characteristic of the Federal gift tax? a.A disclaimer procedure may avoid the tax. b.The alternate valuation date of § 2032 can be elected. c.A marital deduction is available. d.A charitable deduction is available

b.The alternate valuation date of § 2032 can be elected.

Amir dies owning City of Buffalo bonds. On the date of his death, the bonds had a fair market value of $10,000. Interest accrued to the date of Amir's death is $700. Interest accrued after Amir's death is $400. What amount is included in his gross estate? a.$700 b.$400 c.$10,700 d.$11,100 e.$0

c.$10,700

The Federal transfer taxes are applied in a manner that is: a.Cumulative over the individual's lifetime. b.Unified among the taxes. c.Both "Unified among the taxes" and "Cumulative over the individual's lifetime". d.Neither "Unified among the taxes" nor "Cumulative over the individual's lifetime".

c.Both "Unified among the taxes" and "Cumulative over the individual's lifetime".

The POD (payable on death) designation is used for transfers of real property. True False

False

The election of the alternate valuation date must increase both the value of the gross estate and the estate tax liability. True False

False

The election to use the alternate valuation date is made by the beneficiaries. True False

False

The generation-skipping transfer tax (GSTT) is subtracted from any gift or estate tax that may be due. True False

False

The gift tax is applied at a flat 21% rate. True False

False

The gift tax uses gross income as a tax base. True False

False

The gross estate is determined by state law. True False

False

The purpose of the generation-skipping transfer tax is to encourage families to defer Federal gift and estate taxes by transferring assets to very young beneficiaries. True False

False

The unified transfer tax applies only to transfers during the owner's life. True False

False

During the year, Rajeev makes the following transfers. $1,500 to his mayor's reelection campaign. $22,875 to his aunt, Ava, to reimburse her for what she paid the hospital for her gallbladder operation. $14,570 paid directly to the surgeon who performed Ava's gallbladder operation. $5,000 to purchase a used pickup car for his son to use at college. Determine the amount of transfers that are subject to the Federal gift tax. (Include the total amount and disregard the annual exclusion.) ___________

$22,875

Elizabeth made taxable gifts of $7,000,000 in 2020 and $9,100,000 in 2022. She paid no gift tax on the 2020 transfer. On what amount is the Federal gift tax computed for the 2022 gift? $__________

$4,040,000 (7,000,000 + 9,100,000) - 12,060,000

Tyrone dies and leaves property to his sister Latika. Thirty months later, Latika dies. Under § 2015 (credit for tax on prior transfers), Latika's estate can claim a full credit for any Federal estate taxes paid by Tyrone's estate as to amounts passing to Latika. True False

False

Under Mary's will, Kareem inherits property. Kareem dies seven years after Mary. The estate tax attributable to the inclusion of the property in Mary's gross estate is $200,000, and the estate tax attributable to the inclusion of the property in Kareem's gross estate is $180,000. Kareem's estate can claim a credit of $120,000. True False

False

In 2010, Elmira inherited considerable property when her father died. When Elmira dies in 2022, her estate may be able to use the credit for tax on prior transfers to reduce some of the estate taxes paid by her father's estate. True False

False

In 2022, Sonja makes three gifts, each in the amount of $16,000 cash to her three children. Sonja must file a gift tax return for 2022. True False

False

Nicholas, a citizen and resident of Greece, makes a gift of Apple stock to his children. Because Apple is a U.S. corporation, Nicholas will be subject to the U.S. Federal gift tax. True False

False

Property passing to a surviving spouse who is not a U.S. citizen is eligible for the estate tax marital deduction. True False

False

Property settlements made incident to a divorce are subject to the Federal gift tax if made within six months of the finalization of the divorce. True False

False

A Form 709 must be filed for transfers between spouses. True False

False

Elise sells antique furniture to her daughter, Nadia, for $10,000. If the furniture is really worth $100,000, Elise has made a gift to Nadia of $100,000. True False

False

If a credit is allowed under either the provisions of the Code or the provisions of a treaty, the smaller credit must be used. True False

False

If the election is made to use the alternate valuation date for Federal transfer tax purposes, all assets are valued on the date of their disposition. True False

False

A deduction is allowed against the taxable estate for estate and inheritance taxes paid to a state. True False

True

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. True False

True

A gift tax return must be filed whenever the gifts during any one year exceed the annual exclusion or involve the gift of a future interest. True False

True

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

True

An extension of time granted to a calendar year taxpayer for filing an income tax return extends the due date of the gift tax return. True False

True

At the time of her death in 2022, Cheryl still owed $36,000 on her church pledge for the year. Even if church pledges are not an enforceable obligation in the state where Cheryl resided, her estate can claim a deduction for the $36,000 it later pays. True False

True

At the time of her death, Katrina held a Roth IRA account with her spouse as the designated beneficiary. The IRA is included in Katrina's gross estate. True False

True

Felipe pays the surgeon and the hospital for his aunt's heart bypass operation. The transfer is not subject to the gift tax. True False

True

For property owned by a tenancy in common, each tenant is deemed to own an interest equal to the portion of the original consideration furnished. True False

True

Foreign charities qualify for the estate tax charitable deduction. True False

True

In 2017, David inherited considerable property when his father died. When David dies in 2022, his estate may be able to use the credit for tax on prior transfers as to some of the estate taxes paid by his father's estate. True False

True

In his will, Jake leaves real estate with a fair market value of $400,000 and a mortgage of $100,000 (upon which Jake was personally liable) to his spouse. The marital deduction is $300,000. True False

True

Lupita gives $200,000 to her grandson. This is an example of a direct skip for purposes of the GSTT (generation-skipping transfer tax). True False

True

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

True

The Federal transfer tax system includes three separate taxes. True False

True

The GSTT rate is the highest rate under the gift and estate tax schedules. True False

True

The marital deduction is available to same-sex married couples. True False

True

The nature of the property owned by a decedent or the use to which it was put during the decedent-owner's lifetime has no significance as far as the estate tax is concerned. True False

True

Under Wynonna's will, Boris inherits property. Boris dies nine years after Wynonna. The estate tax attributable to the inclusion of the property in Wynonna's gross estate is $80,000, and the estate tax attributable to the inclusion of the property in Boris's gross estate is $60,000. Boris's estate can claim a credit for the overlapping transfers of $12,000. True False

True

Christian wants to transfer as much as possible to his 4 adult married children (including spouses) and 7 minor grandchildren without using any unified transfer tax credit. a. What amount should Christian transfer to accomplish his tax goal without using any unified transfer tax credit? $__________ b. What if Christian's spouse, Mia, joins in the gifts?They can gift $________ without using any unified transfer tax credit. c. Express your computations for parts (a) and (b) as a Microsoft Excel formula.

a. (8 x 16,000) + (7 x 16,000) = 240,000 b. (240,000 x 2) = 480,000 c. Exclude = (MAX(2,NUMDONORS)) * NUMDONEES * ANNEXCL

With $6,218,000 Paul's will creates a trust with the following provisions: life estate to Jacob (Paul's son) and remainder to Anastasia (Paul's granddaughter and Jacob's daughter). Jacob dies when the value of the trust is $9,327,000. a. When does the generation-skipping transfer result? b. What is the amount?

a. Upon Jacob's death b. 9,327,000

The following were transferred under the terms of the will:· Nonprofit cemetery association, $30,000· A charity located in Thailand, $15,000· United Way, $7,000· Federal government, $1,000What is the amount of the deduction? a.$23,000 b.$52,000 c.$$7,000 d.$45,000 e.$53,000

a.$23,000

The Federal gift tax does not include a: a.Deduction for state gift taxes paid. b.Charitable deduction. c.Gift-splitting election. d.Marital deduction.

a.Deduction for state gift taxes paid.

If Emmie and Todd hold ownership as _____, no right of survivorship exists. a.Tenants in common b.Life estate in an irrevocable trust c.Tenants by the entirety d.Joint tenants e.Annuitants in a straight-life annuity

a.Tenants in common

Under Monique's will, Joelle inherits property. Joelle dies three years after Monique. The estate tax attributable to the inclusion of the property in Monique's gross estate is $200,000, and the estate tax attributable to the inclusion of the property in Joelle's gross estate is $180,000. What is the amount of the credit Joelle's estate can claim under these circumstances? a.$160,000 b.$180,000 c.$0 d.$144,000 e.$200,000

d.$144,000

Kit, Amy, and Aaron acquire a piece of land, ownership listed as tenants in common. Of the total purchase price of $1,000,000, Kit and Amy contributed $200,000 each and Aaron contributed $600,000. When the property is worth $1,600,000, Kit dies. What amount will be included in Kit's gross estate? a.$200,000 b.$533,333 c.$0 d.$320,000 e.$600,000

d.$320,000

Which of the following statements regarding the Federal estate tax return is true? a.The estate tax return is filed on Form 709. b.An estate tax return is due if the gross estate exceeds $100,000. c.The Federal estate tax return is due six months after the date of the decedent's death. d.An automatic six-month extension of time to file the return is available. e.The estate tax return is due April 15

d.An automatic six-month extension of time to file the return is available

The Federal unified transfer tax exclusion amount: a.Is doubled on a joint gift tax return. b.Is a different amount for the estate and gift taxes. c.Applies only to the estate tax. d.Is indexed for inflation

d.Is indexed for inflation

When computing the gross estate: a.A distinction is made between business and personal assets. b.Only assets located in the United States are included. c.A distinction is made between tangible and intangible property. d.The fair market value of municipal bonds plus any interest accrued to the date of death is included. e.The face amount of any life insurance of another individual owned by a decedent at the time of death is included.

d.The fair market value of municipal bonds plus any interest accrued to the date of death is included.

Kit, Amy, and Aaron acquire a piece of land, ownership listed as tenants in common. Of the total purchase price of $1,000,000, Kit and Amy contributed $200,000 each and Aaron contributed $600,000. When the property is worth $1,600,000, Kit dies. What amount will be included in Kit's gross estate? a.$200,000 b.$533,333 c.$600,000 d.$0 e.$320,000

e.$320,000

In 2022, Julio makes a taxable gift of $3,000,000. In prior years, Julio's taxable gifts totaled $11,000,000. Under these circumstances: a.A Federal gift tax is due on $14,000,000. b.A Federal gift tax is due on $3,000,000. c.Julio's lifetime taxable gifts cannot exceed $12,060,000. d.The exclusion only applies to the $11,000,000 gifts. e.A Federal gift tax is due on $1,940,000.

e.A Federal gift tax is due on $1,940,000.

In 2022, Juan makes a taxable gift of $2,500,000. In prior years, Juan's taxable gifts totaled $10,000,000. Under these circumstances: a.The exclusion only applies to the $10,000,000 gifts. b.A Federal gift tax is due on $2,500,000. c.Juan's lifetime taxable gifts cannot exceed $12,060,000. d.A Federal gift tax is due on $12,500,000. e.A Federal gift tax is due on $440,000.

e.A Federal gift tax is due on $440,000.

When computing the gross estate: a.A distinction is made between business and personal assets. b.Only assets located in the United States are included. c.A distinction is made between tangible and intangible property. d.The face amount of any life insurance of another individual owned by a decedent at the time of death is included. e.The fair market value of municipal bonds plus any interest accrued to the date of death is included.

e.The fair market value of municipal bonds plus any interest accrued to the date of death is included.