Question 1

Match each statement with the correct choice. Some choices may be used more than once or not at all.
a.In the current year, Debby, a widow, dies. Two years ago she inherited a large amount of wealth from her brother.
b.Scheduled to be eliminated by 2010.
c.Exists only if owners are husband and wife.
d.A type of state death tax.
e.A certificate of deposit listed as "B. Brown, payable on proof of death to my daughter, Evelyn."
f.Annual exclusion not allowed.
g.Cumulative in effect.
h.Right of survivorship present as to type of ownership.
i.Avoids the terminable interest rule of the marital deduction.
j.Exclusion amount
k.Replaced by a deduction.
l.No correct match provided.
-Future interest

Accepted Answer

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

Question 2

Match each statement with the correct choice. Some choices may be used more than once or not at all.
a.In the current year, Debby, a widow, dies. Two years ago she inherited a large amount of wealth from her brother.
b.Scheduled to be eliminated by 2010.
c.Exists only if owners are husband and wife.
d.A type of state death tax.
e.A certificate of deposit listed as "B. Brown, payable on proof of death to my daughter, Evelyn."
f.Annual exclusion not allowed.
g.Cumulative in effect.
h.Right of survivorship present as to type of ownership.
i.Avoids the terminable interest rule of the marital deduction.
j.Exclusion amount
k.Replaced by a deduction.
l.No correct match provided.
-Tenancy by the entirety

Accepted Answer

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

Question 3

Match each statement with the correct choice. Some choices may be used more than once or not at all.
a.In the current year, Debby, a widow, dies. Two years ago she inherited a large amount of wealth from her brother.
b.Scheduled to be eliminated by 2010.
c.Exists only if owners are husband and wife.
d.A type of state death tax.
e.A certificate of deposit listed as "B. Brown, payable on proof of death to my daughter, Evelyn."
f.Annual exclusion not allowed.
g.Cumulative in effect.
h.Right of survivorship present as to type of ownership.
i.Avoids the terminable interest rule of the marital deduction.
j.Exclusion amount
k.Replaced by a deduction.
l.No correct match provided.
-Credit for state death taxes (under § 2011)

Accepted Answer

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

Question 4

Classify each statement appearing below.
a.No taxable transfer occurs
b.Gift tax applies
c.Estate tax applies
-Using his own funds,Horace establishes a savings account designating ownership as follows: "Horace and Nadine as joint tenants with right of survivorship." Nadine later withdraws the funds.

Accepted Answer

The answer of Classify each statement appearing below.
a.No taxable transfer...

Question 5

Match each statement with the correct choice. Some choices may be used more than once or not at all.
a.In the current year, Debby, a widow, dies. Two years ago she inherited a large amount of wealth from her brother.
b.Scheduled to be eliminated by 2010.
c.Exists only if owners are husband and wife.
d.A type of state death tax.
e.A certificate of deposit listed as "B. Brown, payable on proof of death to my daughter, Evelyn."
f.Annual exclusion not allowed.
g.Cumulative in effect.
h.Right of survivorship present as to type of ownership.
i.Avoids the terminable interest rule of the marital deduction.
j.Exclusion amount
k.Replaced by a deduction.
l.No correct match provided.
-Joint tenancy

Accepted Answer

Joint tenancy is characterized by the right of survivorship, meaning when one joint tenant dies, their interest in the property automatically passes to the surviving joint tenant(s).

Question 6

Classify each statement appearing below.
a.No taxable transfer occurs
b.Gift tax applies
c.Estate tax applies
-Maggie purchased an insurance policy on Jim's life and designated Susan as the beneficiary.

Accepted Answer

When Maggie purchases an insurance policy on Jim's life and designates Susan as the beneficiary, no taxable transfer occurs at the time of purchase. Gift and estate taxes typically apply to transfers of wealth either during an individual's life or at their death, but the act of purchasing an insurance policy for the benefit of another does not constitute a taxable transfer under these categories at the time of purchase.

Question 7

Classify each statement appearing below.
a.No taxable transfer occurs
b.Gift tax applies
c.Estate tax applies
-Using his own funds,Horace establishes a savings account designating ownership as follows: "Horace and Nadine as joint tenants with right of survivorship." Horace predeceases Nadine.

Accepted Answer

The answer of Classify each statement appearing below.
a.No taxable transfer...

Question 8

Match each statement with the correct choice. Some choices may be used more than once or not at all.
a.In the current year, Debby, a widow, dies. Two years ago she inherited a large amount of wealth from her brother.
b.Scheduled to be eliminated by 2010.
c.Exists only if owners are husband and wife.
d.A type of state death tax.
e.A certificate of deposit listed as "B. Brown, payable on proof of death to my daughter, Evelyn."
f.Annual exclusion not allowed.
g.Cumulative in effect.
h.Right of survivorship present as to type of ownership.
i.Avoids the terminable interest rule of the marital deduction.
j.Exclusion amount
k.Replaced by a deduction.
l.No correct match provided.
-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 9

Classify each statement appearing below.
a.No taxable transfer occurs
b.Gift tax applies
c.Estate tax applies
-Clarence pays the medical providers (e.g.,physicians,hospital)for his aunt's gall bladder operation.The aunt does not qualify as Clarence's dependent.

Accepted Answer

The answer of Classify each statement appearing below.
a.No taxable transfer...

Question 10

Classify each statement appearing below.
a.No taxable transfer occurs
b.Gift tax applies
c.Estate tax applies
-Cash donation to the reelection campaign of a member of the U.S.Congress.

Accepted Answer

The answer of Classify each statement appearing below.
a.No taxable transfer...

Question 11

Classify each statement appearing below.
a.No taxable transfer occurs
b.Gift tax applies
c.Estate tax applies
-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 12

Classify each statement appearing below.
a.No taxable transfer occurs
b.Gift tax applies
c.Estate tax applies
-Maggie purchased an insurance policy on Jim's life and designated Susan as the beneficiary.Four years later Jim dies,and Susan collects the insurance proceeds.

Accepted Answer

The answer of Classify each statement appearing below.
a.No taxable transfer...

Question 13

Classify each statement appearing below.
a.No taxable transfer occurs
b.Gift tax applies
c.Estate tax applies
-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

When Howard relinquishes the right to revoke the trust, he is making a completed gift for gift tax purposes, as he is giving up control over the trust assets, thereby causing gift tax to apply.

Question 14

Match each statement with the correct choice. Some choices may be used more than once or not at all.
a.In the current year, Debby, a widow, dies. Two years ago she inherited a large amount of wealth from her brother.
b.Scheduled to be eliminated by 2010.
c.Exists only if owners are husband and wife.
d.A type of state death tax.
e.A certificate of deposit listed as "B. Brown, payable on proof of death to my daughter, Evelyn."
f.Annual exclusion not allowed.
g.Cumulative in effect.
h.Right of survivorship present as to type of ownership.
i.Avoids the terminable interest rule of the marital deduction.
j.Exclusion amount
k.Replaced by a deduction.
l.No correct match provided.
-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 15

Classify each statement appearing below.
a.No taxable transfer occurs
b.Gift tax applies
c.Estate tax applies
-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 16

Classify each statement appearing below.
a.No taxable transfer occurs
b.Gift tax applies
c.Estate tax applies
-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 17

Classify each statement appearing below.
a.No taxable transfer occurs
b.Gift tax applies
c.Estate tax applies
-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 Classify each statement appearing below.
a.No taxable transfer...

Question 18

Match each statement with the correct choice. Some choices may be used more than once or not at all.
a.In the current year, Debby, a widow, dies. Two years ago she inherited a large amount of wealth from her brother.
b.Scheduled to be eliminated by 2010.
c.Exists only if owners are husband and wife.
d.A type of state death tax.
e.A certificate of deposit listed as "B. Brown, payable on proof of death to my daughter, Evelyn."
f.Annual exclusion not allowed.
g.Cumulative in effect.
h.Right of survivorship present as to type of ownership.
i.Avoids the terminable interest rule of the marital deduction.
j.Exclusion amount
k.Replaced by a deduction.
l.No correct match provided.
-Community property

Accepted Answer

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

Question 19

Classify each statement appearing below.
a.No taxable transfer occurs
b.Gift tax applies
c.Estate tax applies
-Using his own funds,Horace establishes a savings account designating ownership as follows: "Horace and Nadine as joint tenants with right of survivorship." Nadine predeceases Horace.

Accepted Answer

When Horace establishes a savings account with Nadine as joint tenants with right of survivorship and Nadine predeceases Horace, no taxable transfer occurs because the entire property automatically passes to Horace by operation of law, without going through probate or being subject to estate or gift tax at the time of Nadine's death.

Question 20

Classify each statement appearing below.
a.No taxable transfer occurs
b.Gift tax applies
c.Estate tax applies
-Hector transfers funds to his aunt so she can obtain a much needed heart bypass operation.The aunt does not qualify as Hector's dependent.

Accepted Answer

The answer of Classify each statement appearing below.
a.No taxable transfer...

Quiz 17: The Federal Gift and Estate Taxes

Classify each statement appearing below. a.No taxable transfer occurs b.Gift tax applies c.Estate tax applies -Maggie purchased an insurance policy on Jim's life and designated Susan as the beneficiary.

Classify each statement appearing below. a.No taxable transfer occurs b.Gift tax applies c.Estate tax applies -Using his own funds,Horace establishes a savings account designating ownership as follows: "Horace and Nadine as joint tenants with right of survivorship." Horace predeceases Nadine.

Classify each statement appearing below. a.No taxable transfer occurs b.Gift tax applies c.Estate tax applies -Clarence pays the medical providers (e.g.,physicians,hospital)for his aunt's gall bladder operation.The aunt does not qualify as Clarence's dependent.

Classify each statement appearing below. a.No taxable transfer occurs b.Gift tax applies c.Estate tax applies -Cash donation to the reelection campaign of a member of the U.S.Congress.

Classify each statement appearing below. a.No taxable transfer occurs b.Gift tax applies c.Estate tax applies -Meg gives her 18-year-old son money for his college tuition and living expenses (e.g.,room and board).

Classify each statement appearing below. a.No taxable transfer occurs b.Gift tax applies c.Estate tax applies -Maggie purchased an insurance policy on Jim's life and designated Susan as the beneficiary.Four years later Jim dies,and Susan collects the insurance proceeds.

Classify each statement appearing below. a.No taxable transfer occurs b.Gift tax applies c.Estate tax applies -Homer purchases a U.S.savings bond listing title as: "Homer,payable to Bernice upon Homer's death." Bernice is Homer's sister.

Classify each statement appearing below. a.No taxable transfer occurs b.Gift tax applies c.Estate tax applies -Howard establishes a trust,life estate to his children,remainder to the grandchildren.Under its terms,the trust is revocable by Howard.

Classify each statement appearing below. a.No taxable transfer occurs b.Gift tax applies c.Estate tax applies -Using his own funds,Horace establishes a savings account designating ownership as follows: "Horace and Nadine as joint tenants with right of survivorship." Nadine predeceases Horace.

Classify each statement appearing below. a.No taxable transfer occurs b.Gift tax applies c.Estate tax applies -Hector transfers funds to his aunt so she can obtain a much needed heart bypass operation.The aunt does not qualify as Hector's dependent.