Deck 27: Family Tax Planning

Question 1

If the value of the gross estate is lower on the alternate valuation date than on the date of death,the date of death valuation cannot be used.

Answer 1

False

Question 2

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.

Answer 2

False

Question 3

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

Answer 3

False

Question 4

For Federal estate tax purposes,the gross estate cannot include property the decedent no longer owns.

Question 5

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

Question 6

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

Question 7

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

Question 8

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

Question 9

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.

Question 10

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

Question 11

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 makes a QTIP election,the use of the marital deduction date is not possible.

Question 12

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.

Question 13

A majority of states currently do not impose any tax on transfers by death.

Question 14

Becky made taxable gifts in 2013,2014,and 2015.In computing the gift tax on the 2015 gift,she must consider all of the prior taxable gifts.

Question 15

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

Question 16

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

Question 17

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

Question 18

Manuel,a citizen and resident of Argentina,makes a gift to his children of a ranch located in Colorado.Manuel will be subject to the U.S.gift tax.

Question 19

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

Question 20

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

Question 21

A timely issued disclaimer by an heir transfers the property to someone else without a Federal gift tax result.

Question 22

Transfers to political organizations are exempt from the application of the Federal gift tax.

Question 23

A husband and wife make a gift of their jointly owned vacation home to their adult children.The gift-splitting election must be made.

Question 24

Under certain circumstances,the gift-splitting election can be made even though the electing spouses are no longer married to each other.

Question 25

Mitch pays the surgeon and the hospital for his nondependent aunt's heart bypass operation.The transfer is not subject to the gift tax.

Question 26

Pauline sells antique furniture to her daughter,Nicole,for $10,000.If the furniture is really worth $100,000,Pauline has made a gift to Nicole of $100,000.

Question 27

Sandy pays a local college for her non-dependent boyfriend's tuition.The payment is subject to the Federal gift tax.

Question 28

The use of the election to split gifts under § 2513 is not necessary for spouses who make gifts of their community property.

Question 29

The death of a tenant in common will defeat his or her interest in the property.

Question 30

In community property states,not all property acquired after marriage by either spouse is community property.

Question 31

The election of the alternate valuation date can affect the amount of a charitable deduction allowed to an estate for a bequest to a qualified charity.

Question 32

Under his grandfather's will,Tad is entitled to receive shares of Kroger Corporation.For Federal tax purposes,Tad is allowed to disclaim some of these shares and accept the others.

Question 33

A transfer in trust in which the trustee has the power to accumulate income is not a gift of a future interest if the trustee never exercises the power.

Question 34

Although qualified tuition plans under § 529 are treated favorably for gift tax purposes,such plans are subject to estate tax consequences upon the grantor's death.

Question 35

To make the election to split gifts under § 2513,spouses must file a Form 709 (Federal gift tax return).

Question 36

Sam purchases a U.S.savings bond which he registers as follows: "Sam,payable to Don upon Sam's death." A gift occurs when Sam purchases the bond.

Question 37

In 2015,grandparents contribute jointly owned funds to a § 529 qualified tuition plan on behalf of their granddaughter.The maximum annual exclusion allowed to them is $140,000 ($28,000 × 5 years).

Question 38

For gift tax purposes,a property settlement in consideration of marriage (i.e. ,prenuptial agreement) is treated the same as a property settlement incident to a divorce.

Question 39

Barry pays State University for his dependent daughter's room and board.Barry has made a transfer that is subject to the Federal gift tax.

Question 40

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.

Question 41

A surviving spouse's share of the community property is not included in the deceased spouse's gross estate.

Question 42

Cary and Bo are husband and wife.Using their community funds,they create a trust,life estate to Bo,remainder to their children.Four years later,Cary predeceases Bo.Nothing as to this trust is included in Cary's gross estate.

Question 43

In 2000,Irv creates a revocable trust,income payable to his children for life,remainder to his grandchildren.In 2013,Irv relinquishes the power to revoke the trust.If Irv dies in 2015,the trust is not included in his gross estate.

Question 44

Interest on state and local bonds is not subject to the Federal estate tax.

Question 45

Lyle and Kelly are brother and sister.Using his funds,Lyle purchases land,listing title as: "Lyle and Kelly,joint tenants with right of survivorship." If Kelly dies first,none of the land is included in her gross estate.

Question 46

If a donor has a fiscal year of July 1-June 30 for income tax purposes,this does not change the normal filing date for Form 709.

Question 47

At the time of her death,Rita held a promissory note from a loan she had made to her son.If Rita's will forgives the loan,the note is not included in her gross estate.

Question 48

Harry and Brenda are husband and wife.Using his funds,Harry purchases real estate which he lists as: "Harry and Brenda,tenants by the entirety with right of survivorship." If Brenda dies first,none of the real estate will be included in her gross estate.

Question 49

A Federal gift tax return does not have to be filed if no gift tax is payable.

Question 50

In most cases,the gross estate of a decedent is larger than the probate estate.

Question 51

Iris dies intestate (i.e. ,without a will).All of her property passes to her heirs in accordance with the order of distribution prescribed under applicable state law.

Question 52

In 2011 and with $100,000,Ronald establishes a joint savings account with his cousin,Allison.In 2015,Allison withdraws the $100,000 and disappears.Ronald made a gift to Allison in 2015.

Question 53

Two brothers,Sam and Bob,acquire real estate as equal tenants in common.Of the purchase price of $200,000,Sam furnished $80,000 while Bob provided the balance.If Sam dies first ten years later when the real estate is worth $600,000,his estate includes $240,000 as to the property.

Question 54

In determining whether a dividend issued on stock held by a decedent is included in the gross estate,the record date (rather than the declaration or payment dates) controls.

Question 55

Harry and Brenda are husband and wife.Using her funds,Brenda purchases real estate which she lists as: "Harry and Brenda,joint tenants with right of survivorship." If Brenda dies first,all of the value of the real estate will be included in her gross estate.

Question 56

At the time of his death,Gene held a Roth IRA account with his wife as the designated beneficiary.The IRA is included in Gene's gross estate.

Question 57

In 2013,Katherine made some taxable gifts upon which she paid a Federal gift tax of $96,000.If Katherine dies in 2015,the $96,000 is included in her gross estate under the "gross up" rule.

Question 58

Death does not defeat a deceased spouse's interest in a tenancy by the entirety.

Question 59

Ray purchases U.S.savings bonds which he lists as "Ray and Donna" as co-owners.Donna is Ray's daughter.Donna predeceases Ray.No gift or estate tax consequences result from this situation.

Question 60

Using his separate funds,Wilbur purchases an annuity which pays him a specified amount until death.Upon Wilbur's prior death,a reduced amount is to be paid to Marcia for her life.Marcia predeceases Wilbur.Nothing concerning the annuity contract is included in Marcia's gross estate.

Question 61

In arriving at the taxable estate,expenses incurred in administering community property are deductible only in proportion to the deceased spouse's interest in the community.

Question 62

In his will,Hernando provides for $50,000 to go to the Madrid,Spain,school system.Because it is a foreign charity,the bequest will not qualify as a charitable deduction for estate tax purposes.

Question 63

All of the charitable organizations that qualify for estate tax purposes also qualify for income tax purposes.

Question 64

By his will,all of Rusty's property passes outright to his wife,Patsy.As Patsy was not given a general power of appointment or Rusty's executor did not make a QTIP election,Rusty's estate is not allowed a marital deduction.

Question 65

A marital deduction is not allowed if the surviving spouse is a nonresident alien.

Question 66

At the time of his death,Hal owned 10 cemetery lots worth $40,000 ($4,000 each) for use by himself and his family.These lots are not included in Hal's gross estate and no deduction is allowed the estate.

Question 67

Rachel owns an insurance policy on the life of Albert with Belle as the designated beneficiary.Upon Rachel's prior death,nothing regarding this policy is included in her gross estate.

Question 68

Frank owns an insurance policy on the life of Cynthia,with Leon as the designated beneficiary.Upon Cynthia's prior death,Frank is treated as making a gift of the insurance proceeds to Leon.

Question 69

Manfredo makes a donation of $50,000 to the church where he was baptized in Mexico City.The gift does not qualify as a charitable contribution for Federal income tax purposes.

Question 70

At the time of his prior death,Raul owned a residence with his wife,Manuela,as joint tenants.The residence was purchased by Manuela ten years ago at a cost of $300,000 and has a fair market value of $1.4 million.Raul's estate will be allowed no marital deduction as to the property.

Question 71

Lila is the owner and beneficiary of a policy on the life of her husband,Austin.Upon Austin's prior death,the insurance proceeds paid to Lila do not qualify for the marital deduction.

Question 72

In the case of a transfer by gift,a QTIP election causes the property to be subject to the estate tax upon the death of the donee spouse.

Question 73

To avoid the terminable interest limitation on the marital deduction,the surviving spouse must be granted a general power of appointment over the trust property,or a QTIP election must be made.

Question 74

Reba purchases U.S.savings bonds which she lists in the name of Rod,Reba's son.The purchase of the bonds does not constitute a gift.

Question 75

Sally's will passes real estate to Otto (her surviving spouse).The real estate is worth $800,000 but is subject to a mortgage of $200,000.The transfer provides Sally's estate with a marital deduction of $600,000.

Question 76

As a result of an auto accident from which she later died,Irene totaled a Bentley worth $95,000.If the insurance company covers $60,000 of the loss,Irene's estate can claim a casualty loss of $35,000 in arriving at the taxable estate.

Question 77

The purpose of the marital deduction is to place married decedents in common law states on par with those in community property jurisdictions.

Question 78

At the time of her death,Emma still owed $36,000 on her church pledge for the year.Because church pledges are not an enforceable obligation in the state where Emma resided,her estate cannot claim a deduction for the $36,000 it later pays.

Question 79

At the time of his death in 2015,Leroy owed Federal income taxes on income earned in 2013.Leroy's estate can claim an estate tax deduction for the income tax it pays.

Question 80

Georgia owns an insurance policy on the life of Jake,with Scarlet as the designated beneficiary.Upon Scarlet's prior death,no transfer tax consequences result.