Gerald and Patricia are husband and wife and live in Oregon.In 1980 and using her funds,Patricia purchases a residence for $400,000,listing title to the property as "Gerald and Patricia,joint tenants with right of survivorship." In 2009,Gerald dies first when the residence is worth $2 million.A correct statement as to these transactions is:

Question

Quizplus · Accepted Answer

Option A is incorrect because Patricia did not make a gift to Gerald as joint tenancy with right of survivorship passes the title to the surviving tenant automatically upon the death of the co-tenant.

Option B is correct because when Gerald died, his share of the property received a step-up in basis to the fair market value of $2 million, and since the couple owned the property as joint tenants with the right of survivorship, the entire property passes to Patricia outside of probate. Therefore, only $1 million of the property is included in Gerald's gross estate, and a marital deduction of $1 million is allowed for estate tax purposes.

Option C is incorrect as Option A already establishes that Patricia did not make a gift to Gerald.

Option D is incorrect as the property passes automatically to Patricia outside of probate as joint tenants with the right of survivorship. Therefore, it is not included in Gerald's estate.

Option E is not the answer as option B is correct.

Gerald and Patricia Are Husband and Wife and Live in Oregon.In