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Exam 27: The Federal Gift and Estate Taxes

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Question 61

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In 1990,Bret and Olivia acquire realty for $1 million,with Bret furnishing $400,000 of the purchase price and Olivia providing the balance.Title to the property is listed as: "Bret and Olivia,joint tenants with right of survivorship." In 2011,Olivia dies first when the realty is worth $4 million.How much is included in her gross estate under the following circumstances?

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Question 62

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Ray purchases U.S.savings bonds which he lists as "Ray and Donna" as co-owners.Donna is Ray's daughter.Donna predeceases Ray.No gift or estate tax consequences result from this situation.

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B) False

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Question 63

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In which of the following situations is Polly's property ownership interest not lost by her prior death?

Sally's will passes real estate to Otto (her surviving spouse).The real estate is worth $800,000 but is subject to a mortgage of $200,000.The transfer provides Sally's estate with a marital deduction of $600,000.

Sandy pays a local college for her non-dependent boyfriend's tuition.The payment is not subject to the Federal gift tax.

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

Cole purchases land for $500,000 and transfers it by gift to his two daughters,Madison and Paige,as equal joint tenants with the right of survivorship.Ten years later,when the land is worth $2,000,000,Madison predeceases Paige.Madison's executor includes none of the value of the land in her gross estate,as she contributed nothing toward its cost.Do you agree?

Rachel owns an insurance policy on the life of Albert with Belle as the designated beneficiary.Upon Rachel's prior death,nothing regarding this policy is included in her gross estate.

As reflected by the tax law,Congressional policy relative to the Federal gift and estate taxes has been very inconsistent.Comment on this policy regarding the following time periods.

Which of the following statements relating to the Federal gift tax is incorrect?

Lyle and Beatrice are brother and sister.Using his funds,Lyle purchases land,listing title as: "Lyle and Beatrice,joint tenants with right of survivorship." If Lyle dies first,all of the land is included in his gross estate.

The current $5 million exemption equivalent applies to both the Federal estate and gift taxes.

Harry and Brenda are husband and wife.Using his funds,Harry purchases real estate which he lists as: "Harry and Brenda,tenants by the entirety with right of survivorship." If Brenda dies first,none of the value of the real estate will be included in her gross estate.

The election of the alternate valuation date does not include any income earned by the property after the date the deceased owner died.

In 2009,Glen transferred several assets by gift to different persons.Glen dies in 2011.Information regarding the properties given is summarized below. The transfer of the land and the stocks and bonds resulted in a total gift tax of $60,000.As to these transactions,Glen's gross estate must include:

How could the § 2513 election to split gifts help avoid the generation-skipping transfer tax (GSTT)?

In contrasting the computation of the Federal gift and estate taxes,are past taxable gifts handled in the same fashion? Explain.

The death of a tenant in common will defeat his or her interest in the property.

Stacey inherits unimproved land (fair market value of $6 million) from her father on June 1,2010.Martha disclaims her interest in the property as follows: one-third on December 1,2010; one-third on January 3,2011; and the remaining one-third on May 31,2011.In all cases,the disclaimers pass the interest to her son (the next heir under state law) .The Federal gift tax applies to Stacey for:

At the time of her death in 2011,Emma still owed $36,000 on her church pledge for the year.Even if church pledges are not an enforceable obligation in the state where Emma resided,her estate can claim a deduction for the $36,000 it later pays.