Question 1

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.

Accepted Answer

The answer of Harry and Brenda are husband and wife.Using...

Question 2

A tenancy by the entirety is restricted in most states to having more than two joint owners.

Accepted Answer

A tenancy by the entirety is a form of joint property ownership that is typically reserved exclusively for married couples, meaning it involves only two owners.

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

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

Accepted Answer

There are no transfer tax consequences upon the death of the beneficiary, so no estate or gift tax would be owed.

Question 5

As a result of an auto accident from which she later died,Irene totaled a Bentley worth $195,000.If the insurance company covers $60,000 of the loss,Irene's estate can claim a casualty loss of $135,000 in arriving at the taxable estate.

Accepted Answer

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

Question 6

Sally's will passes real estate to Otto (her surviving husband).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

This statement is true. The marital deduction is the amount that can be passed to a surviving spouse without incurring estate tax. In this case, the value of the real estate ($800,000) minus the mortgage ($200,000) equals $600,000, which is the amount of the marital deduction.

Question 7

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

The donation does not qualify as a charitable contribution for Federal income tax purposes, meaning it cannot be deducted from Manfredo's taxable income on his tax return.

Question 8

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

Accepted Answer

The ownership of an insurance policy on someone else's life (in this case, Albert's life) by Rachel means that upon Rachel's death, the value of the policy is included in her gross estate, not the fact of who the beneficiary is (Belle in this case).

Question 9

In 2015 and with $100,000,Ronald establishes a joint savings account with his cousin,Allison.In 2017,Allison withdraws the $100,000 and disappears.Ronald made a gift to Allison in 2017.

Accepted Answer

In 2017, when Allison withdrew the $100,000 from the joint account, it constituted a gift from Ronald to Allison, as she took control of the funds without any obligation to return them.

Question 10

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.

Accepted Answer

Since the bonds were jointly owned with right of survivorship, Donna's share would automatically pass to Ray upon her death and there would be no gift or estate tax consequences.

Question 11

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

Accepted Answer

The insurance proceeds paid to Lila upon Austin's death do not qualify for the marital deduction because they are not payable to Lila as a result of a transfer of property from her husband. Rather, they are paid by the insurance company as a result of a contract between Austin and the insurance company.

Question 12

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.

Accepted Answer

Joint tenancy with right of survivorship means that if one tenant dies, their share automatically transfers to the other tenant(s) without going through probate. Therefore, if Kelly dies first, her share of the land will transfer to Lyle without being included in her gross estate.

Question 13

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 that it owes and later pays.

Accepted Answer

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

Question 14

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 15

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 purchase of U.S. savings bonds in someone else's name, such as a child, is generally considered a gift because it transfers ownership and benefits to the named individual.

Question 16

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.

Accepted Answer

The answer of Harry and Brenda are husband and wife.Using...

Question 17

The purpose of the marital deduction is to defer any estate tax liability until the second spouse dies.

Accepted Answer

The marital deduction allows for assets to pass between spouses without being subject to estate tax. This defers any estate tax liability until the second spouse dies.

Question 18

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

Accepted Answer

This is true. The estate can claim an estate tax deduction for the income tax it pays on Leroy's behalf.

Question 19

At the time of his 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

The answer of At the time of his death,Raul owned...

Question 20

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.

Quiz 27: The Federal Gift and Estate Taxes

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.

A tenancy by the entirety is restricted in most states to having more than two joint owners.

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

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

As a result of an auto accident from which she later died,Irene totaled a Bentley worth $195,000.If the insurance company covers $60,000 of the loss,Irene's estate can claim a casualty loss of $135,000 in arriving at the taxable estate.

Sally's will passes real estate to Otto (her surviving husband).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.

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.

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

In 2015 and with $100,000,Ronald establishes a joint savings account with his cousin,Allison.In 2017,Allison withdraws the $100,000 and disappears.Ronald made a gift to Allison in 2017.

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.

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

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.

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 that it owes and later pays.

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.

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.

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.

The purpose of the marital deduction is to defer any estate tax liability until the second spouse dies.

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

At the time of his 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.

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.