Question 1

Mr.Howell died this year.He willed a copyright with a 10-year remaining life to Mrs.Howell.His will also sets up a trust for the benefit of Mrs.Howell whom he entitles to receive all of the income semiannually until the earlier of her remarriage or her death.Upon her remarriage or death,the trust property is to be distributed to their children.Do the copyright and trust transfers qualify for the marital deduction? Explain.

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Question 2

At Mark's death,Mark owed a debt of $40,000 plus $2,000 of accrued interest.Mark's funeral expenses were $5,000,and Mark's charge card had a balance due of $400.The expected administration costs for the estate are $2,000.Assume the estate will owe no income taxes in the next few years and that the taxable estate is expected to be in excess of $1 million.What amount should the estate deduct?

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Question 3

Discuss the transferor provisions relating to the estate tax,and provide three examples of transactions governed by the transferor provisions.

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Question 4

Donna died on June 1 of the current year.The executor considers the following information when preparing her estate tax return:
• In 1997,Donna transfers title to her personal residence to her son.The residence is worth $60,000 on the transfer date.Donna continued to live alone in the residence until her death.She did not pay any rent.At her death,the residence is worth $100,000.
• In 1998,Donna created an irrevocable trust and funded it with $300,000 of assets.Donna names a bank as trustee.According to the trust agreement,all the trust income is to be paid out annually for 25 years.The trustee,however,is to decide how much income to pay each year to Donna's son and daughter.Upon termination of the trust,the assets are to be distributed equally among her two children or their estates.The trust's assets are worth $320,000 when Donna dies.
• In 1998,Donna created a revocable trust with a bank named as trustee.She named her grandchild Joe as the beneficiary for life.Upon Joe's death,the property is to be distributed equally among Joe's descendants.The trust assets are worth $300,000 when Donna dies.How much would be included in Donna's gross estate?

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Question 5

Julian died on November 1 and owned 100 shares of a New York Stock Exchange stock.The stock traded at a high of 100 and a low of 98 on November 1.It opened at 98 and closed at 100.On Julian's estate tax return,what will the per-share and total value of the stock be?

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Question 6

Karen died on May 5 of the current year.Her executor elects date-of-death valuation.Karen's gross estate possibly includes the following items:
• Joint checking account (with her husband),which has a balance of $10,000.Her husband did not contribute to the account.
• Joint savings account (with her daughter),which has a balance of $50,000.Her daughter did not contribute to the account.
• Life insurance policy on the life of Karen,having a face value of $400,000.The cost of a comparable policy immediately before Karen's death is $150,000.Karen's estate is the beneficiary.
• Life insurance policy on the life of Karen's daughter,having a face value of $100,000 with an interpolated terminal reserve immediately before Karen's death of $30,000.
Unexpired premiums are $5,000.Karen is the beneficiary.How much,if any,of these items are included in Karen's estate?

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Question 7

List the various categories of estate tax deductions,and compare them with the categories of gift tax deductions.What differences exist?

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Question 8

In 1997,Barry and Fred provide $20,000 and $60,000 of consideration,respectively,to purchase a beach house titled in both their names as joint tenants with right of survivorship.Barry dies in the current year and is survived by Fred.The beach house is valued at $100,000.What amount must be included in Barry's gross estate for the beach house?

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Question 9

In 2000,Mike transfers $100,000 of leased land to a trust.The trust income is payable to Mike's son for 13 years,after which time the land is to revert to Mike.This year,Mike dies when the land is valued at $210,000.The applicable federal rate is 10%,and the reversionary actuarial factor is 0.30.How much of the trust value must be included in Mike's estate?

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Question 10

The following items were discovered in reviewing materials for John's estate tax return:
(1)Two years ago,John sold stock to his son,Patrick,for $30,000.At the date of sale,the stock had a value of $65,000.The value of the stocks at John's death was $90,000.
(2)John owned a beach house,worth $500,000,with his sister,Amber,who paid for it.
(3)John's home was held in a tenancy by the entirety with his wife,Julia.Julia paid for the house,which had a value of $300,000 on the date of his death.
(4)John's clothing and other personal belongings are worth $3,700 on the date of his death.
What amount is included in John's estate?

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Question 11

Guy died this year.His estate includes a closely held business interest valued at $400,000 and other property valued at $675,000.Guy's allowable Sec.2053 and 2054 deductions total $75,000.Within three years of death,partly in hopes of qualifying his estate for the installment payment allowed under Sec.6166 treatment,Guy made gifts of listed securities of $350,000 (at 2002 valuations)and paid no gift tax on the gift.Is Guy's estate eligible for Sec.6166 treatment?

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Question 12

Outline and briefly describe the estate tax computation,beginning with the gross estate.

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Question 13

Explain why living trusts are popular tax-planning vehicles.

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Question 14

Wally died on November 15.His gross estate includes 100 shares of ABC Corporation stock.On November 15,ABC's stock trades at a high of $100,a low of $92,and a close of $94.What is the per-share value of the stock in Wally's estate?

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Question 15

On December 1,1976,Bart made a gift and claimed a $30,000 specific exemption.When Bart died in 2008,his tax base was $2,000,000.Assuming the maximum unified credit is $780,800,what is the credit available when computing Bart's estate tax is what?

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Question 16

Compare the tax treatment of administration expenses with that of the decedent's debts.

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Question 17

Ray died on March 4.His estate includes some stock and a parcel of land.The stock is still owned by the estate on September 4,but the land is sold on August 30.If Ray's executor elects the alternate valuation date,what values would be used for estate tax purposes for the stock and the land?

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Question 18

Explain how shares of stock traded on a stock exchange are valued.What is the blockage rule?

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Question 19

Mary creates and funds a revocable trust.Mary names her son to receive the income for life and her grandson to receive the property upon the son's death.What are Mary's powers with respect to the trust,and how will the trust be treated in her estate?

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Question 20

Five years ago,George and Jerry (his brother)provide $40,000 and $60,000,respectively,to purchase realty titled in the names of George and Jerry as joint tenants with right of survivorship.George dies in the current year and is survived by Jerry.At the time of George's death,the realty is valued at $300,000.What is the value of the realty in George's gross estate?

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Quiz 25: The Estate Tax