Question 1

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

Accepted Answer

The answer of A Federal gift tax return does not...

Question 2

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.

Accepted Answer

The answer of At the time of her death,Rita held...

Question 3

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.

Accepted Answer

Even though the Roth IRA passes directly to the designated beneficiary, it is still included in the decedent's gross estate for estate tax purposes.

Question 4

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

Accepted Answer

A surviving spouse's share of the community property is not included in the deceased spouse's gross estate because it is already owned equally by both spouses and therefore not part of the deceased spouse's individual estate.

Question 5

In 2010,Katherine made some taxable gifts upon which she paid a Federal gift tax of $96,000.If Katherine dies in 2012,the $96,000 is included in her gross estate under the "gross up" rule.

Accepted Answer

The gross up rule requires the value of any gift taxes paid on taxable gifts made by the decedent within three years of their death to be included in their gross estate. Therefore, the $96,000 gift tax paid by Katherine in 2010 would be included in her gross estate if she dies in 2012.

Question 6

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

Accepted Answer

The gross estate of a decedent includes all assets owned by the decedent at the time of their death, including those that pass outside of probate such as joint accounts and life insurance proceeds. The probate estate only includes assets that are subject to probate, such as real estate and assets held solely in the decedent's name. Therefore, in most cases, the gross estate is larger than the probate estate.

Question 7

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

Accepted Answer

The answer of Death does not defeat a deceased spouse's...

Question 8

In 2011 and with $100,000,Ronald establishes a joint savings account with his cousin,Allison.In 2012,Allison withdraws the $100,000 and disappears.Ronald made a gift to Allison in 2012.

Accepted Answer

By establishing the joint savings account, Ronald gave ownership rights to Allison, making the $100,000 also legally hers. Therefore, when she withdrew the money, she did not commit any theft or fraud. As a result, Ronald made a gift to her by giving her joint ownership of the account.

Question 9

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 Federal law.

Accepted Answer

In the United States, the distribution of an intestate person's property is governed by state law, not federal law. Each state has its own intestacy statutes that determine how the property is distributed among heirs.

Question 10

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

Accepted Answer

According to IRS rules, the gift-splitting election can still be made by the electing spouses even if they are no longer married to each other, as long as they were married to each other at some point during the calendar year in which the gifts were made.

Question 11

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,half of the real estate will be included in her gross estate.

Accepted Answer

When real estate is held as tenants by the entirety, it is owned jointly by the husband and wife. Upon the death of one spouse, the surviving spouse automatically becomes the sole owner of the property. Therefore, if Brenda dies first, half of the real estate will not be included in her gross estate because it will pass to Harry by operation of law.

Question 12

Interest on state and local bonds is subject to the Federal estate tax.

Accepted Answer

Interest on state and local bonds is included in the gross estate of the decedent for federal estate tax purposes. Therefore, it is subject to federal estate tax.

Question 13

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.

Accepted Answer

The answer of Two brothers,Sam and Bob,acquire real estate as...

Question 14

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.

Accepted Answer

The fiscal year of a donor for income tax purposes does not affect the normal filing date for Form 709, which is April 15th of the year following the gift.

Question 15

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,Bo predeceases Cary.Nothing as to this trust is included in Bo's gross estate.

Accepted Answer

The value of the life estate interest that Bo held in the trust should be included in Bo's gross estate for estate tax purposes, as it was a property interest that terminated upon his death.

Question 16

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

Accepted Answer

The answer of In determining whether a dividend issued on...

Question 17

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

Accepted Answer

The answer of The use of the election to split...

Question 18

In 2000,Irv creates a revocable trust,income payable to his children for life,remainder to his grandchildren.In 2010,Irv relinquishes the power to revoke the trust.If Irv dies in 2012,the trust is not included in his gross estate.

Accepted Answer

The trust is included in Irv's gross estate because he retained the power to revoke it until 2010, which is within three years of his death in 2012.

Question 19

For estate tax purposes,a surviving spouse's share of the community property is handled in the same manner as a surviving spouse's dower interest.

Accepted Answer

In estate tax, a surviving spouse's share of community property is generally not subject to estate tax, whereas a dower interest, which is a common law provision, may be treated differently depending on jurisdiction.

Question 20

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.

Accepted Answer

Since the contract specifically states that nothing concerning the annuity is included in Marcia's gross estate, it is true that the annuity is not considered an asset of Marcia's estate upon her death.

Quiz 18: The Federal Gift and Estate Taxes