Question 1

Peggy gives $200,000 to her grandson. This is an example of a direct skip for purposes of the GSTT (generation-skipping transfer tax).

Accepted Answer

A direct skip is when a transfer is made to a skip person, which is defined as someone who is two or more generations below the transferor (such as a grandchild). The GSTT applies to these types of transfers, and in this case, Peggy's gift of $200,000 to her grandson would be subject to the tax.

Question 2

In 2002, Katelyn inherited considerable property when her father died. When Katelyn dies in 2013, her estate may be able to use § 2013 (credit for tax on prior transfers) as to some of the estate taxes paid by her father's estate.

Accepted Answer

The answer of In 2002, Katelyn inherited considerable property when...

Question 3

Which, if any, of the following is not a characteristic of the Federal gift tax?

Accepted Answer

The answer of Which, if any, of the following is...

Question 4

Which, if any, of the following statements correctly reflects the rules applicable to the alternate valuation date ?

Accepted Answer

The answer of Which, if any, of the following statements...

Question 5

The U.S. has death tax conventions (i.e., treaties) with most of the countries of the world.

Accepted Answer

The answer of The U.S. has death tax conventions (i.e.,...

Question 6

Which, if any, of the following is not a characteristic of the Federal estate tax?

Accepted Answer

All of the options listed are characteristics of the Federal estate tax, meaning that none of them is not a characteristic. Therefore, E is the correct answer.

Question 7

In determining the Federal gift tax on a current gift:

Accepted Answer

When determining the Federal gift tax on a current gift, all prior taxable gifts must be included. This is because the federal gift tax is a cumulative tax, meaning that it is based on the total value of gifts made during the donor's lifetime. Taxable gifts made after 1976 (Option A) and before 1977 (Option B) are both irrelevant in determining the tax on a current gift. The donor is allowed to claim a credit for all gift taxes paid (Option D), but this does not affect the calculation of the tax on a current gift. Therefore, choice C is the best answer.

Question 8

In which, if any, of the following independent situations can the alternate valuation date be elected? Value of Gross Estate Estate Tax Result

E) None of the above

Accepted Answer

The answer of In which, if any, of the following...

Question 9

The current top Federal transfer tax rate of 40% is the highest rate ever imposed.

Accepted Answer

The answer of The current top Federal transfer tax rate...

Question 10

At the time of his death, Tom owned some common stock.  The Citron Corporation stock is sold by the executor of the estate seven months after Tom's death for $1,300,000. If the alternate valuation date is properly elected, the value of Tom's estate as to these stocks is:

Accepted Answer

The answer of At the time of his death, Tom...

Question 11

Eric dies at age 96 and is survived by his third wife, Monique (age 22), and a granddaughter, Paula (age 50). Eric's will divides his $11 million estate between these two survivors. Both of these transfers are subject to the generation skipping transfer tax (GSTT).

Accepted Answer

The answer of Eric dies at age 96 and is...

Question 12

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 13

In which, if any, of the following independent situations has Trent made a gift?

Accepted Answer

The answer of In which, if any, of the following...

Question 14

In which of the following situations is Polly's property ownership interest not lost by her prior death?

Accepted Answer

In a tenancy in common, Polly's ownership interest is not lost upon her death; it passes to her heirs or as directed by her will.

Question 15

In which, if any, of the following independent situations has Jean made a gift?

Accepted Answer

Buying someone a gift is considered a gift, and Jean gave her grandfather an expensive RV as a birthday gift. In option A, Jean gave her son the money for a specific purpose (college expenses), so it is not considered a gift. In option C, Jean paid for her nephew's tuition, but since he is not her dependent, it is also not considered a gift. In option D, the contribution to the Congressman's reelection campaign is a political donation, not a gift.

Question 16

Sidney dies and leaves property to his sister Giselle. Thirteen months later, Giselle dies. Under § 2013 (credit for tax on prior transfers), Giselle's estate can claim a full credit for any Federal estate taxes paid by Sidney's estate as to amounts passing to Giselle.

Accepted Answer

According to § 2013, if property is transferred from one person to another and the donor pays a Federal gift tax on that transfer, the value of the gift is also included in the transferor's gross estate. In this case, Sidney's estate paid a Federal estate tax on the property transferred to Giselle, so Giselle's estate can claim a credit for that amount.

Question 17

At the time of Dylan's death, he was a resident of the United States. He owns land located in a foreign country, which is subject to that country's death tax. This same land also can be subject to the Federal estate tax.

Accepted Answer

Even though Dylan was a resident of the United States, since he owns land located in a foreign country, that land is subject to that country's death tax. Moreover, the same land may also be subject to the Federal estate tax in the United States.

Question 18

Which, if any, of the following items is subject to indexation (adjusted to reflect inflation)?

Accepted Answer

The annual exclusion amount for gift tax purposes, currently set at $15,000, is subject to indexation and may increase in future years based on inflation. None of the other items listed are subject to indexation.

Question 19

Which of the following is not a characteristic of both the Federal gift tax and the Federal estate tax?

Accepted Answer

The answer of Which of the following is not a...

Question 20

Concerning the formula for the Federal estate tax, which, if any, of the following statements is correct?

Accepted Answer

The answer of Concerning the formula for the Federal estate...

Quiz 18: The Federal Gift and Estate Taxes