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Exam 27: Family Tax Planning

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Question 61

True/False

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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.

A) True
B) False

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Question 62

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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.

A) True
B) False

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Question 63

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Prior to her death in 2015,Alma made the following gifts. Fair Market Value Year Asset Date of Gift Date of Death 2007 Marketable securities $400,000 $900,000 2013 Term life insurance policy -0- 100,000 2013 Unimproved land 900,000 950,000 As a result of the 2013 transfer,Alma paid a gift tax of $70,000.As to these transactions,Alma's gross estate includes:

Andrea dies on April 30,2015.Which,if any,of the following items is included in her gross estate?

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.

The § 2513 election to split gifts is less useful in community property states than in common law states.Explain.

Classify each statement appearing below. a.No taxable transfer occurs b.Gift tax applies c.Estate tax applies -Cash donation to the reelection campaign of a member of the U.S.Congress.

At the time of his death,Tom owned some common stock. Date of Death Value Six Value Months Later Citron Corporation $1,500,000 $1,100,000 Grey Corporation 1,300,000 1,400,000 ​ If the alternate valuation date is properly elected,the value of Tom's estate as to these stocks is:

A transfer in trust in which the trustee has the power to accumulate income is not a gift of a future interest if the trustee never exercises the power.

Transfers to political organizations are exempt from the application of the Federal gift tax.

At the time of his death,Norton was involved in the following transactions. ∙ Owned land in joint tenancy with Emily.The land is worth $600,000 and was purchased by Norton 15 years ago for $150,000. ∙ Owned land in a tenancy by the entirety with Amy.The land is worth $800,000 and was purchased by Norton five years ago for $450,000. ∙ Owned land in an equal tenancy in common with Noah.The land is worth $400,000 and was purchased by Norton four years ago for $300,000. ∙ Owned City of Dayton bonds worth $500,000. ​ What amount is included in Norton's gross estate?

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.

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.

Kim,a resident and citizen of Korea,dies during an operation at the Mayo Clinic in Rochester (MN).Because Kim died in the U.S. ,he will be subject to the Federal estate tax.

In 2004,Katelyn inherited considerable property when her father died.When Katelyn dies in 2015,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.

In 2013,Glen transferred several assets by gift to different persons.Glen dies in 2015.Information regarding the properties given is summarized below. Fair Market Value Date of Gift Date of Death Insurance policy on Glen's life $ 20,000 $200,000 Unimproved land 890,000 900,000 Stocks and bonds 600,000 800,000 ​ The transfer of the land and the stocks and bonds resulted in a total gift tax of $60,000.As to these transactions,Glen's gross estate must include:

Lily pays for her grandson's college expenses.Under what conditions might such payments not be a gift?

Match each statement with the correct choice. Some choices may be used more than once or not at all. a.In the current year, Debby, a widow, dies. Two years ago she inherited a large amount of wealth from her brother.b.Death does not defeat an owner's interest in property.c.Exists only if husband and wife are involved.d.A type of state tax on transfers by death.e.Must decrease the amount of the gross estate.f.Annual exclusion not allowed.g.Cumulative in effect.h.Right of survivorship present as to type of ownership.i.Avoids the terminable interest rule of the marital deduction.j.Exemption equivalent.k.Bypass amount.l.No correct match provided. -Inheritance tax

An estate tax is a tax on the right of an heir to receive property on the death of the owner.

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.