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Exam 18: The Federal Gift and Estate Taxes

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Question 71

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Stacey inherits unimproved land (fair market value of $6 million) from her father on June 1, 2010. Martha disclaims her interest in the property as follows: one-third on December 1, 2010; one-third on January 3, 2011; and the remaining one-third on May 31, 2011. In all cases, the disclaimers pass the interest to her son (the next heir under state law) . The Federal gift tax applies to Stacey for:

A) All of the disclaimers.
B) The disclaimer made in 2010.
C) The disclaimers made in 2011.
D) The May 31, 2011 disclaimer.
E) None of the disclaimers.

F) B) and E)
G) A) and D)

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Question 72

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How could the § 2513 election to split gifts help avoid the generation-skipping transfer tax (GSTT)?

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The election to split by a married taxpa...

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Question 73

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At the time of her death on October 4, 2011, Kaitlyn was involved in the following transactions. As to these transactions, Kaitlyn's gross estate includes:

Community property law has been influential in the enactment of several provisions of the Federal estate and gift tax. In this regard, comment on the marital deduction under §§ 2056 and 2523.

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?

Calvin's will passes $800,000 of cash to his widowed sister, Muriel. The estate tax attributable to the cash is $110,000. Muriel dies seven years later, and the estate tax generated by the $800,000 is $100,000. How much of a credit for tax on prior transfers will Muriel's estate be allowed?

At the time of Clint's death in 2011, part of his estate consists of the following. Under Clint's will, all of his property passes to his wife, Jennifer. How much marital deduction is Clint's estate allowed?

At the time of his death, Jason was a participant in Silver Corporation's qualified pension plan and group term life insurance. The balance of the survivorship feature in his pension plan is: The term insurance has a maturity value of $100,000. All amounts are paid to Pam, Jason's daughter. One result of these transactions is:

Transfers to political organizations are not exempt from the application of the Federal gift tax.

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.

Which, if any, of the following items is subject to indexation (adjusted to reflect inflation) ?

Murray owns an insurance policy on the life of his father, Ethan. Upon Ethan's death, the policy proceeds of $2,000,000 are paid to the designated beneficiary, Grace. What are the tax consequences resulting from Ethan's death based on the following assumptions?

In determining the Federal gift tax on a current gift:

Under the terms of a trust created by Billie, Jody (Billie's brother) has the right to determine how its income is to be divided among Billie's children. Jody holds a general power of appointment.

Under his grandfather's will, Tad is entitled to receive shares of Kroger Corporation. For Federal tax purposes, Tad is allowed to disclaim some of these shares and accept the others.

Daniel's will provides that all of his property passes to a trust, life estate to his wife, remainder to charity. If Daniel's executor does not make a QTIP election, the use of the alternate valuation date is possible.

A lifetime transfer that is supported by full and adequate consideration is not a gift.

At the time of her death in 2011, Emma still owed $36,000 on her church pledge for the year. Even if church pledges are not an enforceable obligation in the state where Emma resided, her estate can claim a deduction for the $36,000 it later pays.

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

At the time of her death, Abigail held a general power of appointment over a trust created by her grandmother in 1990. Since Abigail never exercised the general power, none of the trust is included in her gross estate.