Question 1

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

Accepted Answer

The Federal tax system does not impose inheritance taxes, but some states do.

Question 2

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 because they are taxes imposed on the transfer of property or wealth rather than on income or sales.

Question 3

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 of a decedent may include property that he or she did not own but had an interest in, such as life insurance proceeds payable to someone else or property transferred during the decedent's lifetime but with retained control.

Question 4

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

Joint tenancy includes the right of survivorship, meaning when one owner dies, the surviving owner(s) automatically inherit the deceased owner's share of the property, resulting in sole ownership by the survivor.

Question 5

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

Accepted Answer

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

Question 6

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 7

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 considered a business transaction and not a gift. A gift typically involves the transfer of property or assets without receiving anything in return or without receiving adequate consideration.

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

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

Question 9

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 10

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 11

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

If the alternate valuation date is elected, the value of the assets in the estate is determined as of six months after the date of death. This can result in a lower valuation for estate tax purposes, which may reduce the amount of the marital deduction allowed for a bequest to a surviving spouse.

Question 12

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

This statement is incorrect. Even if Paul becomes a Canadian resident and does not own any property in the U.S. at the time of his death, the U.S. Federal estate tax may still apply to his worldwide assets if they exceed the applicable exemption amount.

Question 13

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 election of the alternate valuation date only affects the value of the property as of the date of the deceased owner's death. Any income earned by the property after that date would not be included in the calculation.

Question 14

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 15

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

The gift tax on a current gift is calculated by adding the value of the current gift to the total value of all the prior taxable gifts made by the donor. This is known as the cumulative gift tax calculation. Therefore, Becky must consider all of her prior taxable gifts when computing the gift tax on her 2009 gift.

Question 16

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 17

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 18

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

Accepted Answer

Prior to 1976, the tax rates for transfers by gift were lower than those for transfers by death. However, the Tax Reform Act of 1976 equalized the rates for both types of transfers.

Question 19

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 20

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

Accepted Answer

The exemption equivalent and bypass amount are two different terms for the same thing - the amount of assets that an individual can transfer tax-free through gifts or their estate. As of 2021, the exemption equivalent/bypass amount is $11.7 million.

Quiz 18: The Federal Gift and Estate Taxes