Question 1

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.

Accepted Answer

Expenses incurred in administering community property are deductible only in proportion to the deceased spouse's interest in the community. This is because community property is owned equally by both spouses, hence only half of the expenses can be attributed to the deceased spouse's taxable estate.

Question 2

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.

Accepted Answer

In the United States, bequests to foreign charities can qualify for the estate tax charitable deduction, provided the foreign organization meets certain requirements similar to those for domestic charities.

Question 3

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

Accepted Answer

The answer of All of the charitable organizations that qualify...

Question 4

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.

Accepted Answer

The answer of By his will,all of Rusty's property passes...

Question 5

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

Accepted Answer

The answer of A marital deduction is not allowed if...

Question 6

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.

Accepted Answer

Cemetery lots are considered non-probate assets and are not included in the gross estate. Therefore, no deduction is allowed for them in the estate tax return.

Question 7

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.

Accepted Answer

The value of the insurance policy on Albert's life would be included in Rachel's gross estate if she had any incidents of ownership in the policy at the time of her death.

Question 8

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.

Accepted Answer

When the owner of an insurance policy designates a beneficiary, that beneficiary becomes the recipient of the proceeds upon the insured's death. This is generally considered a gift from the owner to the beneficiary, even though the owner has passed away. In this case, Frank is the policy owner and Leon is the designated beneficiary, so upon Cynthia's death, Frank is treated as making a gift of the insurance proceeds to Leon.

Question 9

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.

Accepted Answer

In order for a gift to be considered a charitable contribution for Federal income tax purposes, it must meet certain requirements and be made to a qualified organization. It is not specified in the given information whether or not the church where Manfredo was baptized is a qualified organization. Therefore, we cannot assume that the gift qualifies as a charitable contribution.

Question 10

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.

Accepted Answer

In a joint tenancy, the surviving spouse automatically inherits the deceased spouse's share, and the value of the property is typically eligible for the marital deduction in the estate of the deceased spouse.

Question 11

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.

Accepted Answer

The insurance proceeds paid to Lila do not qualify for the marital deduction because they are not considered part of Austin's estate and are not subject to estate tax.

Question 12

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.

Accepted Answer

A QTIP election defers the estate tax until the death of the surviving spouse, not the donee spouse. However, the property must be included in the donee spouse's estate for estate tax purposes.

Question 13

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.

Accepted Answer

This is true, as granting the surviving spouse a general power of appointment or making a QTIP election are two methods that can avoid the terminable interest limitation on the marital deduction.

Question 14

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.

Accepted Answer

The answer of Reba purchases U.S.savings bonds which she lists...

Question 15

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.

Accepted Answer

The marital deduction is the value of the property passing to the surviving spouse, which in this case is $800,000 (the fair market value of the real estate), minus the mortgage of $200,000, for a total of $600,000. Therefore, Sally's estate receives a marital deduction of $600,000.

Question 16

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.

Accepted Answer

The answer of As a result of an auto accident...

Question 17

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

Accepted Answer

The answer of The purpose of the marital deduction is...

Question 18

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.

Accepted Answer

The answer of At the time of her death,Emma still...

Question 19

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.

Accepted Answer

This is true. Leroy's estate can claim an estate tax deduction for the income tax it pays. This is known as a deduction for claims against the estate, and it allows the estate to reduce its taxable value by the amount of the income tax liability.

Question 20

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.

Accepted Answer

When a designated beneficiary of a life insurance policy dies prior to the policyholder, there are no transfer tax consequences. This means that Georgia, as the policyholder, can choose to name a new beneficiary without incurring any gift tax or estate tax implications.

Quiz 27: Family Tax Planning