Question 1

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

Accepted Answer

False

Question 2

Becky made taxable gifts in 1974,1986,and 2009.In computing the gift tax on the 2009 gift,she must consider all of the prior taxable gifts.

Accepted Answer

This is because the gift tax system is based on a cumulative lifetime gift amount. All prior taxable gifts are summed up with the current gift to determine the total taxable amount and the corresponding tax liability.

Question 3

The election of the alternate valuation date can affect the amount of a marital deduction allowed to an estate for a bequest to a surviving spouse.

Accepted Answer

The election of the alternate valuation date can affect the value of assets included in the gross estate and, therefore, the amount of the marital deduction for a bequest to a surviving spouse. If the alternate valuation date results in a lower value of the assets passing to the surviving spouse, then the marital deduction will also be lower. On the other hand, if the alternate valuation date results in a higher value, then the marital deduction will also be higher.

Question 4

In community property states,all property acquired after marriage by either spouse is community property.

Accepted Answer

The answer of In community property states,all property acquired after...

Question 5

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 Federal estate tax applies to the estates of U.S. citizens and residents, regardless of where their property is located. Becoming a Canadian resident and owning no property in the U.S. will not exempt Paul from the Federal estate tax.

Question 6

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

Accepted Answer

The exemption equivalent and the bypass amount refer to the same thing in the context of federal estate and gift taxes. This refers to the maximum amount that an individual can pass on to their heirs or beneficiaries without incurring federal estate or gift taxes. As of 2021, this amount is $11.7 million per individual.

Question 7

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, the alternate valuation date can be used for determining the value of the property passing to the trust. This can be useful for estate tax purposes, as it allows the property to be valued as of the date six months after the date of death, which may result in a lower value and lower estate tax liability. However, the use of the alternate valuation date does not impact the terms of the will, including the provision for the life estate and remainder to charity.

Question 8

Kim,a resident and citizen of Korea,dies during an operation at the Mayo Clinic in Rochester (MN).Just because Kim died in the U.S. ,he will not be subject to the Federal estate tax.

Accepted Answer

Kim is not subject to the Federal estate tax because he is not a U.S. citizen or resident.

Question 9

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

Accepted Answer

This statement is true. While some states do impose inheritance taxes, the federal tax system does not have an inheritance tax. However, there is a federal estate tax, which is a tax on the total value of a person's estate after they pass away.

Question 10

A father wants to give a parcel of land to his two children.If he wants the survivor to have sole ownership,he should list ownership of the property as joint tenants.

Accepted Answer

When ownership of a property is listed as joint tenants, the surviving joint tenant automatically inherits the entire property upon the death of the other joint tenant. This is known as the right of survivorship. Therefore, if the father wants the survivor (one child) to have sole ownership, he should list ownership of the property as joint tenants.

Question 11

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 12

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 13

For Federal estate tax purposes,the gross estate of a decedent may include property he or she does not own.

Accepted Answer

The gross estate for Federal estate tax purposes may include property owned by the decedent at the time of their death, as well as certain types of property they may have transferred or gifted during their lifetime, and property held jointly with others. Therefore, it is possible for the gross estate to include property that the decedent did not technically own at the time of their death.

Question 14

A Federal gift tax only can be imposed on the donor.

Accepted Answer

The answer of A Federal gift tax only can be...

Question 15

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

Accepted Answer

A transfer that is supported by full and adequate consideration is not considered a gift, as the recipient has given something of equal value in exchange for the transfer.

Question 16

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 17

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

Accepted Answer

Federal gift and estate taxes are considered as excise taxes, which are levied on a particular transaction, such as the gift or transfer of property at death.

Question 18

The election of the alternate valuation date does not include any income earned by the property after the date the deceased owner died.

Accepted Answer

The alternate valuation date only affects the value of the property for estate tax purposes and does not include any income earned by the property after the date of the owner's death.

Question 19

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 20

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 before the Tax Reform Act of 1976, but since then, the tax rates for transfers by gift and transfers by death have been the same.

Quiz 27: The Federal Gift and Estate Taxes