Question 1

Under the alternate valuation date election,each asset in the gross estate is valued at the lesser of the date of death value or six months thereafter.

Accepted Answer

Under the alternate valuation date election, each asset in the gross estate is valued either at its date of death value or its value six months after the date of death, not necessarily the lesser of the two. The entire estate is revalued at the later date, and the election is made to potentially reduce estate taxes if the value of the assets has decreased.

Question 2

For both the Federal gift and estate tax,a deduction is allowed for certain transfers to charity.

Accepted Answer

Both the Federal gift and estate tax allow a deduction for certain transfers to charity.

Question 3

For Federal estate tax purposes,the gross estate may include property the decedent does not own.

Accepted Answer

The gross estate may include property the decedent has transferred during their lifetime or has certain powers over, such as a life estate.

Question 4

An estate tax is a tax on the right of an heir to receive property on the death of the owner.

Accepted Answer

The answer of An estate tax is a tax on...

Question 5

A few states impose both an estate tax and an inheritance tax.

Accepted Answer

Some states, such as Maryland and New Jersey, have both an estate tax and an inheritance tax. An estate tax is based on the value of the assets left behind by the deceased, while an inheritance tax is based on the relationship of the beneficiary to the deceased and the value of the inheritance received.

Question 6

In the past,the amount of the unified tax credit has been the same for both transfers by gift and transfers by death.

Accepted Answer

The answer of In the past,the amount of the unified...

Question 7

For Federal estate tax purposes,the gross estate does not include property that will pass to a surviving spouse.

Accepted Answer

For Federal estate tax purposes, the gross estate includes all property the decedent owned at the time of death, including property that will pass to a surviving spouse. However, there is an unlimited marital deduction that can apply to property passing to the surviving spouse, effectively reducing the estate tax on that property to zero.

Question 8

For Federal estate and gift tax purposes,the exclusion amount is the same thing as the exemption equivalent.

Accepted Answer

For federal estate and gift tax purposes, the exclusion amount and the exemption equivalent refer to the same thing, which is the amount of assets or gifts that can be excluded from taxes.

Question 9

A lifetime transfer that is supported by full and adequate consideration is not a gift.

Accepted Answer

A transfer supported by full and adequate consideration, such as a payment or exchange of equivalent value, is not considered a gift but rather a transaction between two parties.

Question 10

Some states impose inheritance taxes,but the Federal tax system does not.

Accepted Answer

Some states such as Pennsylvania, New Jersey, and Maryland impose inheritance taxes, but the Federal tax system does not impose an inheritance tax. However, the Federal tax system does impose an estate tax on certain estates.

Question 11

At one point,the tax rates applicable to transfers by gift were lower than those applying to transfers by death.

Accepted Answer

This was true in the United States until 1976 when the gift tax and estate tax rates were equalized.

Question 12

José,a citizen and resident of Panama,makes a gift of ExxonMobil stock to his children.Because ExxonMobil is a U.S.corporation,José will be subject to the U.S.Federal gift tax.

Accepted Answer

The answer of José,a citizen and resident of Panama,makes a...

Question 13

Kim,a resident and citizen of Korea,dies during an operation at the Mayo Clinic in Rochester (MN).Because Kim died in the U.S.,he will be subject to the Federal estate tax.

Accepted Answer

The answer of Kim,a resident and citizen of Korea,dies during...

Question 14

In some cases,the Federal gift tax can be imposed on someone other than the donor.

Accepted Answer

If a donor gives a gift of more than $15,000 to an individual and pays the gift tax themselves, the IRS may require the recipient to pay the tax if the donor fails to do so. This is known as the "reciprocal gift tax rule." Additionally, if the gift is given to a trust and the trust fails to pay the gift tax, the donor and/or the trust beneficiary may be held responsible for payment.

Question 15

If the value of the gross estate is lower on the alternate valuation date than on the date of death,then the alternate valuation must be used.

Accepted Answer

The answer of If the value of the gross estate...

Question 16

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.

Accepted Answer

The U.S. estate tax applies to the worldwide estate of U.S. citizens and residents, regardless of where their assets are located. Becoming a Canadian resident and owning no property in the U.S. does not exempt Paul from the Federal estate tax.

Question 17

One of the reasons the estate tax was enacted was to prevent the avoidance of the gift tax by the making of "deathbed gifts."

Accepted Answer

The answer of One of the reasons the estate tax...

Question 18

Becky made taxable gifts in 1974,2010,and 2011.In computing the gift tax on the 2011 gift,she must consider all of the prior taxable gifts.

Accepted Answer

The gift tax applies cumulatively, meaning that all prior taxable gifts must be considered when computing the gift tax on a subsequent gift. This is known as the unified gift and estate tax system.

Question 19

Daniel's will provides that all of his property passes to a trust,life estate to his wife,remainder to charity.If Daniel's executor does not make a QTIP election,the use of the alternate valuation date is possible.

Accepted Answer

If the executor does not make a QTIP election, then the trust would not qualify for the marital deduction and would be subject to tax. Using the alternate valuation date could potentially lower the value of the assets and therefore decrease the tax owed.

Question 20

Sometimes also known as transaction taxes,Federal gift and estate taxes are excise taxes.

Accepted Answer

Federal gift and estate taxes are considered excise taxes, which are taxes on specific transactions or activities.

Quiz 27: The Federal Gift and Estate Taxes