Question 1

Doyle died in 2000 and by will created a trust with the following provisions: "life estate to my wife, Grace, remainder upon her death to our children." Grace dies this year. Is the trust Doyle created included in Grace's gross estate? Explain.

Accepted Answer

The answer of Doyle died in 2000 and by will...

Question 2

Match each statement with the correct choice. Some choices may be used more than once or not at all.
-Meg gives her 18-year-old son money for his college tuition and living expenses (e.g., room and board).

Accepted Answer

Payments made directly to an educational institution for tuition or to a provider for medical expenses on behalf of another person are not considered taxable gifts under U.S. tax law. Since the question specifies the money is for college tuition and living expenses, it's considered support, not a taxable gift. Estate tax does not apply as it is concerned with transfers of estate after death.

Question 3

Match each statement with the correct choice. Some choices may be used more than once or not at all.
-Exclusion amount

Accepted Answer

The answer of Match each statement with the correct choice....

Question 4

Match each statement with the correct choice. Some choices may be used more than once or not at all.
-Credit for tax on prior transfers (under § 2013)

Accepted Answer

The credit for tax on prior transfers (under § 2013) applies when a decedent received a gift or inheritance within the past three years and that gift or inheritance was subject to estate or gift tax. In this case, Debby inherited a large amount of wealth from her brother two years ago, which may be subject to estate tax. The credit would decrease the tax owed on Debby's estate by the amount of tax paid on the prior transfer.

Question 5

Match each statement with the correct choice. Some choices may be used more than once or not at all.
-QTIP election

Accepted Answer

The answer of Match each statement with the correct choice....

Question 6

Match each statement with the correct choice. Some choices may be used more than once or not at all.
-Election to split gifts (§ 2513)

Accepted Answer

Election to split gifts under § 2513 is applicable only when a husband and wife are involved, allowing them to treat gifts made by one spouse as if made by both for gift tax purposes.

Question 7

Match each statement with the correct choice. Some choices may be used more than once or not at all.
-Federal gift tax

Accepted Answer

The answer of Match each statement with the correct choice....

Question 8

Match each statement with the correct choice. Some choices may be used more than once or not at all.
-Inheritance tax

Accepted Answer

The answer of Match each statement with the correct choice....

Question 9

Match each statement with the correct choice. Some choices may be used more than once or not at all.
-Tenancy by the entirety

Accepted Answer

The answer of Match each statement with the correct choice....

Question 10

Match each statement with the correct choice. Some choices may be used more than once or not at all.
-Community property

Accepted Answer

The answer of Match each statement with the correct choice....

Question 11

Match each statement with the correct choice. Some choices may be used more than once or not at all.
-Howard establishes a trust, life estate to his children, remainder to the grandchildren. Under its terms, the trust is revocable by Howard. Howard later relinquishes the right to revoke the trust.

Accepted Answer

This statement refers to the concept of ownership in property being retained even after death, known as the right of survivorship.

Answer: E 
 Relinquishing the right to revoke a trust typically results in inclusion of the trust assets in the grantor's gross estate, which may decrease the taxable amount of the estate.

Answer: J 
 The exemption equivalent refers to the amount of assets that can be excluded from federal estate tax.

Answer: K 
 The bypass amount refers to assets that can be left to a surviving spouse tax-free and still be eligible for the estate tax exemption equivalent.

Answer: L 
 This statement does not correspond to any of the choices provided.

Question 12

Match each statement with the correct choice. Some choices may be used more than once or not at all.
-Joint tenancy

Accepted Answer

Joint tenancy is a type of ownership in which the right of survivorship is present, meaning that when one owner dies, their interest in the property automatically transfers to the surviving owner(s).

Answer: B
 Death does not defeat an owner's interest in property held in joint tenancy. The deceased owner's interest passes to the surviving owner(s) by the right of survivorship.

Answer: L
 No statement is matched with choice L.

Question 13

Match each statement with the correct choice. Some choices may be used more than once or not at all.
-Tenancy in common

Accepted Answer

Tenancy in common means that each owner has a distinct, divisible interest in the property, which does not automatically transfer to the other owners upon death. Thus, death does not defeat an owner's interest in property; it passes to their heirs or as directed by their will, not to the other tenants in common.

Question 14

Match each statement with the correct choice. Some choices may be used more than once or not at all.
-Future interest

Accepted Answer

The answer of Match each statement with the correct choice....

Question 15

Match each statement with the correct choice. Some choices may be used more than once or not at all.
-Homer purchases a U.S. savings bond listing title as: "Homer, payable to Bernice upon Homer's death." Bernice is Homer's sister. Homer dies four years later, and Bernice cashes in the bond and keeps the proceeds.

Accepted Answer

Estate tax applies because the transfer of the bond's ownership occurs due to Homer's death, and it becomes part of his estate before it is transferred to Bernice.

Question 16

Match each statement with the correct choice. Some choices may be used more than once or not at all.
-Homer purchases a U.S. savings bond listing title as: "Homer, payable to Bernice upon Homer's death." Bernice is Homer's sister.

Accepted Answer

When Homer purchases a U.S. savings bond and lists it as "Homer, payable to Bernice upon Homer's death," no taxable transfer occurs immediately. The transfer of ownership will only occur upon Homer's death, and at that point, it may be subject to estate tax, not gift tax, depending on the value of Homer's estate and the tax laws in effect at the time of his death. However, the statement does not directly involve estate tax applicability at the time of purchase.

Question 17

Match each statement with the correct choice. Some choices may be used more than once or not at all.
-Clarence pays the medical providers (e.g., physicians, hospital) for his aunt's knee replacement operation. The aunt does not qualify as Clarence's dependent.

Accepted Answer

The answer of Match each statement with the correct choice....

Question 18

Match each statement with the correct choice. Some choices may be used more than once or not at all.
-Alternate valuation date (§ 2032)

Accepted Answer

The alternate valuation date can only be used if it decreases the value of the gross estate and the estate tax liability.

Question 19

Match each statement with the correct choice. Some choices may be used more than once or not at all.
-Cash donation to the reelection campaign of a member of the U.S. Congress.

Accepted Answer

Cash donation to the reelection campaign of a member of the U.S. Congress is not subject to gift tax.

Question 20

Match each statement with the correct choice. Some choices may be used more than once or not at all.
-Howard establishes a trust, life estate to his children, remainder to the grandchildren. Under its terms, the trust is revocable by Howard.

Accepted Answer

The answer of Match each statement with the correct choice....

Quiz 18: The Federal Gift and Estate Taxes

Doyle died in 2000 and by will created a trust with the following provisions: "life estate to my wife, Grace, remainder upon her death to our children." Grace dies this year. Is the trust Doyle created included in Grace's gross estate? Explain.

Match each statement with the correct choice. Some choices may be used more than once or not at all. -Meg gives her 18-year-old son money for his college tuition and living expenses (e.g., room and board) .

Match each statement with the correct choice. Some choices may be used more than once or not at all. -Exclusion amount

Match each statement with the correct choice. Some choices may be used more than once or not at all. -Credit for tax on prior transfers (under § 2013)

Match each statement with the correct choice. Some choices may be used more than once or not at all. -QTIP election

Match each statement with the correct choice. Some choices may be used more than once or not at all. -Election to split gifts (§ 2513)

Match each statement with the correct choice. Some choices may be used more than once or not at all. -Federal gift tax

Match each statement with the correct choice. Some choices may be used more than once or not at all. -Inheritance tax

Match each statement with the correct choice. Some choices may be used more than once or not at all. -Tenancy by the entirety

Match each statement with the correct choice. Some choices may be used more than once or not at all. -Community property

Match each statement with the correct choice. Some choices may be used more than once or not at all. -Howard establishes a trust, life estate to his children, remainder to the grandchildren. Under its terms, the trust is revocable by Howard. Howard later relinquishes the right to revoke the trust.

Match each statement with the correct choice. Some choices may be used more than once or not at all. -Joint tenancy

Match each statement with the correct choice. Some choices may be used more than once or not at all. -Tenancy in common

Match each statement with the correct choice. Some choices may be used more than once or not at all. -Future interest

Match each statement with the correct choice. Some choices may be used more than once or not at all. -Homer purchases a U.S. savings bond listing title as: "Homer, payable to Bernice upon Homer's death." Bernice is Homer's sister.

Match each statement with the correct choice. Some choices may be used more than once or not at all. -Clarence pays the medical providers (e.g., physicians, hospital) for his aunt's knee replacement operation. The aunt does not qualify as Clarence's dependent.

Match each statement with the correct choice. Some choices may be used more than once or not at all. -Alternate valuation date (§ 2032)

Match each statement with the correct choice. Some choices may be used more than once or not at all. -Cash donation to the reelection campaign of a member of the U.S. Congress.

Match each statement with the correct choice. Some choices may be used more than once or not at all. -Howard establishes a trust, life estate to his children, remainder to the grandchildren. Under its terms, the trust is revocable by Howard.