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Exam 27: The Federal Gift and Estate Taxes

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Question 31

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At the time of his death,Trent owned some common stock. The Aqua Corporation stock is sold by the executor of the estate seven months after Trent's death for $1,300,000.If the alternate valuation date is properly elected,the value of Trent's estate as to these stocks is:

A) $2,300,000.
B) $2,400,000.
C) $2,500,000.
D) $2,700,000.
E) None of the above.

F) A) and E)
G) C) and E)

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Question 32

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For Federal estate tax purposes,the gross estate includes property that the decedent owns at the time of death.It may also include property that the decedent no longer owns.Explain.

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Transactions such as gifts within three ...

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Question 33

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In which,if any,of the following independent situations has Jean made a gift?

Which,if any,of the following is a correct statement regarding the filing of a gift tax return (Form 709) ?

Prior to his death in 2009,Rex made the following gifts. As a result of the 2008 transfer,Rex paid a gift tax of $70,000.As to these transactions,Rex's gross estate includes:

Bernard's will passes $800,000 of cash to his widowed sister,Marie.The estate tax attributable to the cash is $120,000.Marie dies five years later,and the estate tax generated by the $800,000 is $140,000.How much of a credit for tax on prior transfers will Marie's estate be allowed?

Sidney dies and leaves property to his sister Giselle.Three years later,Giselle dies.Under § 2013 (credit for tax on prior transfers),Giselle's estate can claim a full credit for any Federal estate taxes paid by Sidney's estate as to amounts passing to Giselle.

Death does not defeat a deceased spouse's interest in community property.

To make the election to split gifts under § 2513,spouses must file a Form 709 (Federal gift tax return).

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.

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

Concerning the election to split gifts under § 2513,which of the following statements is incorrect?

Manfredo makes a donation of $50,000 to the church where he was baptized in Mexico City.The gift does not qualify as a charitable contribution for Federal income tax purposes.

In 2007,Katherine made some taxable gifts upon which she paid a Federal gift tax of $96,000.If Katherine dies in 2009,the $96,000 is included in her gross estate under the "gross up" rule.

In 2008 and with $100,000,Ronald establishes a joint savings account with his cousin,Allison.In 2009,Allison withdraws the $100,000 and disappears.Ronald made a gift to Allison in 2009.

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.

Which,if any,of the following items is subject to indexation (adjusted to reflect inflation) ?

Since the credit for state death taxes paid (under § 2011)has been eliminated,no double tax relief is available to an estate that is subject to both Federal and state death taxes.

A surviving spouse's share of the community property is not included in the deceased spouse's gross estate.

Winston and Ginger are husband and wife and have always lived in Texas.At the time of Winston's prior death in 2009,he was insured in the amount of $1,000,000.The policy was taken out after their marriage,and premiums were paid 50% from community funds and 50% from Winston's separate property.The designated beneficiary of the policy is Harry,Ginger's son by a prior marriage.As to the policy proceeds: