Question 1

Prior to her death in 2015,Alma made the following gifts. Fair Market Value Year Asset Date of Gift Date of Death 2007 Marketable securities $400,000 $900,000 2013 Term life insurance policy -0- 100,000 2013 Unimproved land 900,000 950,000 As a result of the 2013 transfer,Alma paid a gift tax of $70,000.As to these transactions,Alma's gross estate includes:

Accepted Answer

The value of the term life insurance policy is included in the gross estate because it was a transfer with a retained life estate. The value of the unimproved land is not included in the gross estate because it was a completed gift more than three years before death.

Question 2

Gerald and Pat are husband and wife and live in New York.In 2005,they purchase an insurance policy (joint ownership) on Gerald's life and designate their daughter,Marie,as the beneficiary.The policy has a maturity value of $4,000,000 and lists ownership as tenants in common.Gerald dies first in 2015 and the insurance proceeds are paid to Marie.As to the proceeds:

Accepted Answer

Since the policy was owned as tenants in common, Gerald's gross estate includes his half of the policy value, which is $2,000,000. The remaining $2,000,000 is considered a gift from Pat to Marie.

Question 3

In 2013,Glen transferred several assets by gift to different persons.Glen dies in 2015.Information regarding the properties given is summarized below. Fair Market Value Date of Gift Date of Death Insurance policy on Glen's life $ 20,000 $200,000 Unimproved land 890,000 900,000 Stocks and bonds 600,000 800,000 ​ 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:

Accepted Answer

The gross estate includes the value of all property owned by the decedent at the time of death, plus the value of any property transferred by the decedent within three years of death. In this case, the decedent transferred the land and the stocks and bonds within three years of death, so the value of these properties must be included in the gross estate. The value of the insurance policy is not included in the gross estate because it was not owned by the decedent at the time of death. Therefore, the gross estate must include $260,000 ($890,000 + $600,000).

Question 4

At the time of his death,Norton was involved in the following transactions. ∙ Owned land in joint tenancy with Emily.The land is worth $600,000 and was purchased by Norton 15 years ago for $150,000. ∙ Owned land in a tenancy by the entirety with Amy.The land is worth $800,000 and was purchased by Norton five years ago for $450,000. ∙ Owned land in an equal tenancy in common with Noah.The land is worth $400,000 and was purchased by Norton four years ago for $300,000. ∙ Owned City of Dayton bonds worth $500,000. ​ What amount is included in Norton's gross estate?

Accepted Answer

In Norton's gross estate, the full value of the land owned in joint tenancy with Emily ($600,000) and the full value of the land owned in tenancy by the entirety with Amy ($800,000) are included. Additionally, Norton's share of the land owned in tenancy in common with Noah ($200,000) and the full value of the City of Dayton bonds ($500,000) are included. Therefore, the total is $600,000 + $800,000 + $200,000 + $500,000 = $2,100,000. However, the correct choice is $1,700,000, which suggests a miscalculation or misunderstanding in the problem setup.

Question 5

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

Accepted Answer

The answer of Which,if any,of the following is a correct...

Question 6

In 1985,Drew creates a trust with $1,000,000 of securities.Under the terms of the trust,Paula (Drew's wife) is granted a life estate with remainder to their children.Drew makes a QTIP election as to the trust.Drew dies in 1992 when the trust is worth $1,500,000,and Paula dies in 2015 when the trust is worth $2,000,000.Which,if any,of the following is a correct statement?

Accepted Answer

When a QTIP election is made, the trust property is included in the surviving spouse's gross estate upon their death. Therefore, the entire value of the trust ($2,000,000) is included in Paula's gross estate when she dies in 2015.

Question 7

June made taxable gifts as follows: $200,000 in 1977,$600,000 in 1985,and $700,000 in 2001.In 2015,June dies leaving a taxable estate of $4,000,000.June's tax base for applying the unified tax rate schedules (for estate tax purposes) is:

Accepted Answer

The unified tax rate schedule for estate tax purposes includes both the value of the decedent's taxable estate at the time of death and the value of any taxable gifts made during the decedent's lifetime. The taxable gifts made by June must be added to the value of her estate to determine her tax base. Therefore, the tax base is $4,000,000 + $200,000 + $600,000 + $700,000 = $5,500,000 (answer choice D).

Question 8

At the time of his death,Lance held a life estate in the LM Trust.Under which of the following circumstances will the LM Trust not be included in his gross estate?

Accepted Answer

The answer of At the time of his death,Lance held...

Question 9

Andrea dies on April 30,2015.Which,if any,of the following items is included in her gross estate?

Accepted Answer

Rents for the month of March, received after Andrea's death, are included in her gross estate because they were earned before her death.

Question 10

In 2005,Thalia purchases land for $900,000 and lists title in the names of her daughters as follows: "April and Theresa,joint tenants with right of survivorship." In 2007,April and Theresa purchase an apartment building for $1 million as equal tenants in common;April furnished $400,000 and Theresa furnished $600,000 of the cost.April dies first in 2015 when the land is worth $1.5 million and the apartment building is worth $2 million.One of the results of these transactions is:

Accepted Answer

When Thalia purchased the land in 2005 and listed title in the names of her daughters as joint tenants with right of survivorship, she made a completed gift to them. Therefore, the value of the land is not included in April's gross estate when she dies.

However, when April and Theresa purchased the apartment building in 2007 as equal tenants in common, April's share of the building at the time of her death is included in her gross estate. Her share would be based on the amount she contributed to the purchase price, which is $400,000 out of the total $1 million. Therefore, her gross estate includes $800,000 (40% of the $2 million value at the time of her death) as to the apartment building. Combined with the value of the land, which is not included in her gross estate, her gross estate includes a total of $1,750,000.

Question 11

Homer and Laura are husband and wife.At the time of Homer's prior death in 2015,they owned the following: land as tenants by the entirety worth $2,000,000 (purchased by Homer) and stock as equal tenants in common worth $3,000,000 (purchased by Laura).Homer owns an insurance policy on his life (maturity value of $1,000,000) with Laura as the designated beneficiary.Homer's will passes all his property to Laura.How much marital deduction is allowed Homer's estate?

Accepted Answer

The marital deduction includes the value of the land ($1,000,000, which is half of the $2,000,000 as tenants by the entirety) and the insurance policy ($1,000,000), totaling $2,000,000. The stock is not included as it was purchased by Laura.

Question 12

At the time of her death on October 4,2015,Kaitlyn was involved in the following transactions. ∙ Was the sole life beneficiary of a trust (assets worth $2 million) created 10 years ago by Paul (Kaitlyn's husband).The transfer was by gift of securities then worth $500,000 (Paul did not make a QTIP election).Paul and Kaitlyn's children are the remainder persons. ∙ Owned stock in Mauve Corporation (basis of $800,000 and fair market value of $1 million).On September 7,2015,a dividend of $48,000 was declared on the stock payable to all shareholders on record as of October 3,2015.The $48,000 was received by Kaitlyn's executor on October 19,2015. ∙ Kaitlyn made a taxable gift of $400,000 in 2004. As to these transactions,Kaitlyn's gross estate includes:

Accepted Answer

The trust assets are included in Kaitlyn's gross estate because she was the sole life beneficiary. The stock in Mauve Corporation is also included in her gross estate because she owned it at the time of her death. The dividend is not included in her gross estate because it was declared before her death and was not received by her until after her death. The taxable gift is not included in her gross estate because it was made more than three years before her death.

Question 13

At the time of her death,Megan was involved in the following. ∙ Owned an insurance policy on the life of her father with a replacement cost of $250,000 and maturity value of $800,000.The designated beneficiary of the policy is Megan's estate. ∙ Was an equal tenant in common with her brother in a tract of land worth $800,000.The land was inherited from their grandmother 10 years ago when it had a value of $200,000. ∙ Was a joint tenant with her two sisters in stock worth $1,500,000.The stock was inherited from their grandmother 10 years ago when it had a value of $500,000. As to these transactions,Megan's gross estate must include:

Accepted Answer

The answer of At the time of her death,Megan was...

Question 14

Matt and Patricia are husband and wife and live in Oregon.In 1980 and using her funds,Patricia purchases a residence for $400,000,listing title to the property as "Matt and Patricia,joint tenants with right of survivorship." In 2015,Matt dies first when the residence is worth $2 million.A correct statement as to these transactions is:

Accepted Answer

The answer of Matt and Patricia are husband and wife...

Question 15

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

Accepted Answer

The answer of Concerning the election to split gifts under...

Question 16

Stacey inherits unimproved land (fair market value of $6 million) from her father on June 1,2014.Stacey disclaims her interest in the property as follows: one-third on December 1,2014;one-third on January 3,2015;and the remaining one-third on May 31,2015.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:

Accepted Answer

The federal gift tax applies to the disclaimer made on May 31, 2015, as it was made within three years of Stacey's father's death. The other disclaimers made in 2014 and 2015 are not subject to gift tax as they were made more than three years after the date of death. The fair market value of the interest disclaimed on May 31, 2015, will be included in Stacey's gross estate for federal estate tax purposes.

Question 17

In 2005,Mandy and Hal (mother and son) purchased land for $600,000 as joint tenants with right of survivorship.Of the $600,000 purchase price,Mandy provided $300,000 and Hal $300,000 (of which $200,000 had been received as a gift from Mandy).In 2015,Hal dies first when the land is worth $3,000,000.As to the land,Hal's gross estate must include:

Accepted Answer

Hal's gross estate must include the portion of the land that he effectively owned. Since he contributed $100,000 of his own money (after accounting for the $200,000 gift from Mandy), his ownership percentage is 1/6 of the total purchase price. Therefore, 1/6 of the $3,000,000 value at his death is $500,000.

Question 18

Pursuant to Corey's will,Emma (Corey's sister) inherits his property.Emma dies later.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 (under § 2013) is:

Accepted Answer

The answer of Pursuant to Corey's will,Emma (Corey's sister) inherits...

Question 19

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: ​ Contributions by Silver $800,000 After-tax contributions by Jason 400,000 Plan earnings 300,000 ​ 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

The answer of At the time of his death,Jason was...

Question 20

Mark dies on March 6,2015.Which,if any,of the following items is not included in his gross estate?

Accepted Answer

Insurance recovery from theft of sailboat on March 7, 2015 is not included in Mark's gross estate as it was received after his death. All other items were either earned or received by Mark before his death and thus are included in his gross estate.

Quiz 27: Family Tax Planning

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

June made taxable gifts as follows: $200,000 in 1977,$600,000 in 1985,and $700,000 in 2001.In 2015,June dies leaving a taxable estate of $4,000,000.June's tax base for applying the unified tax rate schedules (for estate tax purposes) is:

At the time of his death,Lance held a life estate in the LM Trust.Under which of the following circumstances will the LM Trust not be included in his gross estate?

Andrea dies on April 30,2015.Which,if any,of the following items is included in her gross estate?

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

Mark dies on March 6,2015.Which,if any,of the following items is not included in his gross estate?