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Exam 27: The Federal Gift and Estate Taxes

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Question 51

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

A) True
B) False

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Question 52

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Cliff loans his adult daughter, Stella, a large sum of money to enable her to start her own business. The loan is evidenced by a note, and no interest is provided for or repayment date specified. What are the potential tax ramifications of this arrangement to Cliff and Stella?

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Cliff has made a gift to Stella of the i...

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Question 53

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Classify each of the independent statements appearing below. -Decedent holds a life estate in a trust created by her spouse who died five years ago. The executor of the spouse's estate made a QTIP election as to the trust. Decedent's son is the remainderman of the trust.

The death of a tenant in common will defeat his or her interest in the property.

Match each statement with the correct choice. Some choices may be used more than once or not at all. -Alternate valuation date (§ 2032)

Classify each of the independent statements appearing below. -Cash dividends on stock owned by the decedent (declaration and record dates preceded death but payment date was after death) .

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

A timely issued disclaimer by an heir transfers the property to someone else without a Federal gift tax result.

Classify each statement appearing below. -Cash donation to the reelection campaign of a member of the U.S. Congress.

Classify each statement appearing below. -Maggie purchased an insurance policy on Jim's life and designated Susan as the beneficiary.

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

Classify each statement appearing below. -In full settlement of her marital rights, Henry transfers property to his wife, Nancy. Three months later, Henry and Nancy are divorced.

Andrea dies on April 30, 2013. Which, if any, of the following items is included in her gross estate?

At the time of his prior death, Raul owned a residence with his wife, Manuela, as tenants by the entirety. 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.

For both the Federal gift and estate tax, a deduction is allowed for certain transfers to a spouse.

Among the assets included in Taylor's gross estate are the following. Fair Market Value Six Months After $\begin{array}{lcc} & \text { Date of Death } & \text { Date of Death } \\\text { Stock in Grebe Corporation } & \$ 7,000,000 & \$ 6,800,000 \\\text { Stock in Rail Corporation } & 800,000 & 850,000 \\\text { Office building } & 900,000 & 890,000\end{array}$ Three months after Taylor's death in 2013, her executor sells the Rail stock for $830,000. a. What is the amount of Taylor's gross estate if date of death value is used? b. What is the amount of Taylor's gross estate if the alternate valuation date is elected? c. Suppose all of Taylor's assets pass to her surviving spouse. Does this have any impact on the choice of valuation date? Explain.

In 2000, Irv creates a revocable trust, income payable to his children for life, remainder to his grandchildren. In 2011, Irv relinquishes the power to revoke the trust. If Irv dies in 2013, the trust is not included in his gross estate.

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.

At the time of his death, Tom owned some common stock. $\begin{array}{lcc} & \begin{array}{c}\text { Date of Death } \\\text { Value }\end{array} & \begin{array}{c}\text { Value Six } \\\text { Months Later }\end{array} \\\text { Citron Corporation } & \$ 1,500,000 & \$ 1,100,000 \\\text { Grey Corporation } & 1,300,000 & 1,400,000\end{array}$ 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:

Paul, a U.S. citizen, will avoid the Federal estate tax if he becomes a Canadian resident and owns no property located in the U.S. at the time of his death.