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Question;2254. CHAPTER;18?THE FEDERAL GIFT AND ESTATE TAXES Question PR #12;At the time of her death in 2011, Amber owns property worth $4,000,000. Other;information regarding her affairs is as follows.;Unpaid;pledge to the building fund of her church;$50,000;College;graduation gift she had promised her grandson;20,000;Local;property taxes owed (accrued prior to death);100,000;Casualty;loss to uninsured vacation home (fire occurred one month before death);400,000;Mortgage;owed on personal residence;700,000;All of these items (except the casualty loss) were paid by her estate and none;were deducted on Form 1041 (income tax return of the estate). What is Amber?s;taxable estate?;2255. CHAPTER;18?THE FEDERAL GIFT AND ESTATE TAXES Question PR #13;At the time of Clint?s death in 2011, part of his estate consists of the;following.;?;Roth IRA;(value of $1,000,000) with Jennifer as the designated beneficiary.;?;Land (worth;$3,000,000) held in joint tenancy with Jennifer. Jennifer is Clint?s wife and;originally furnished the purchase price.;?;Building;(worth $3,000,000) held as equal tenants in common with Jennifer and Dana.;Dana is Clint?s mother, and she originally purchased the property.;Under Clint?s will, all of his property passes to his wife, Jennifer. How much;marital deduction is Clint?s estate allowed?;2256. CHAPTER;18?THE FEDERAL GIFT AND ESTATE TAXES Question PR #14;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?;2257. CHAPTER;18?THE FEDERAL GIFT AND ESTATE TAXES Question ES #1;As reflected by the tax law, Congressional policy relative to the Federal gift;and estate taxes has been very inconsistent. Comment on this policy regarding;the following time periods.;a.;From;original enactment of these taxes up to the Tax Reform Act of 1976.;b.;From the Tax;Reform Act of 1976 to EGTRRA.;c.;From EGTRRA;to the Tax Relief Act (TRA) of 2010.;2258. CHAPTER;18?THE FEDERAL GIFT AND ESTATE TAXES Question ES #2;The Federal gift and estate taxes were restructured in 1976 into the unified;transfer tax. The objective of the change was to eliminate the tax difference;between transfers during life (gift tax) and at death (estate tax). Does this;uniformity of treatment currently exist? In this regard, comment on the;following differences between the two taxes.;a.;Applicable;unified transfer tax credit.;b.;Applicable;unified transfer tax rates.;c.;Availability;of the charitable and marital deductions.;d.;Availability;of the annual exclusion.;2259. CHAPTER;18?THE FEDERAL GIFT AND ESTATE TAXES Question ES #3;Byron and Amanda are heirs of the Nelson estate. Although each receives a;$20,000 bequest, they pay different amounts of inheritance tax. Explain the;possible reason for the discrepancy.;2260. CHAPTER;18?THE FEDERAL GIFT AND ESTATE TAXES Question ES #4;In contrasting the computation of the Federal gift and estate taxes, are past;taxable gifts handled in the same fashion? Explain.;2261. CHAPTER;18?THE FEDERAL GIFT AND ESTATE TAXES Question ES #5;For Federal estate tax purposes, the gross estate includes property that the;decedent owns at the time of death. It may also include property that the;decedent no longer owns. Explain.;2262. CHAPTER;18?THE FEDERAL GIFT AND ESTATE TAXES Question ES #6;Waldo is his mother?s sole heir and is the designated executor of her estate.;Although the alternate valuation date would yield a smaller gross estate and;less estate tax liability, the ? 2032 election is not made. Instead, Waldo;files a Form 706 for his mother?s estate using higher date of death values.;Why?;2263. CHAPTER;18?THE FEDERAL GIFT AND ESTATE TAXES Question ES #7;Madeline pays for her mother?s nursing home expenses. Under what conditions;might such payments not be a gift?;2264. CHAPTER;18?THE FEDERAL GIFT AND ESTATE TAXES Question ES #8;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?;2265. CHAPTER;18?THE FEDERAL GIFT AND ESTATE TAXES Question ES #9;The IRS does not consider property settlements in consideration of marriage as;being transfers for valuable consideration. Consequently, such prenuptial;settlements are subject to the Federal gift tax. Why, then, are property;settlements incident to divorce exempt from the gift tax?;2266. CHAPTER;18?THE FEDERAL GIFT AND ESTATE TAXES Question ES #10;Walt dies intestate (i.e., without a will) in the current year with a gross;estate valued at $4,000,000. Under applicable state law, Walt?s property passes;to Kelly or to Belle, in that order. Kelly has an estimated net worth of;$3,000,000 while Belle has none. From a tax planning standpoint, what course of;action might be advisable.;2267. CHAPTER;18?THE FEDERAL GIFT AND ESTATE TAXES Question ES #11;In what manner;does the tax law favor contributions to qualified tuition plans under ? 529?;2268. CHAPTER;18?THE FEDERAL GIFT AND ESTATE TAXES Question ES #12;In determining the gift tax due on a current gift, a credit is allowed for gift;taxes actually paid on prior taxable gifts. Comment on the accuracy of this;statement.;2269. CHAPTER;18?THE FEDERAL GIFT AND ESTATE TAXES Question ES #13;The ? 2513 election to split gifts is less useful in community property states;than in common law states. Explain.;2270. CHAPTER;18?THE FEDERAL GIFT AND ESTATE TAXES Question ES #14;Distributions from retirement plans and proceeds from life insurance plans;usually are not subject to probate.;a.;Why are they;not part of the probate estate?;b.;When might;they be included in the probate estate?;2271. CHAPTER;18?THE FEDERAL GIFT AND ESTATE TAXES Question ES #15;For estate tax purposes, what is the difference between a surviving spouse?s;share of the community property and a dower (or courtesy) interest?;2272. CHAPTER;18?THE FEDERAL GIFT AND ESTATE TAXES Question ES #16;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.;2273. CHAPTER;18?THE FEDERAL GIFT AND ESTATE TAXES Question ES #17;Joint tenancies and tenancies by the entirety avoid probate, while tenancies in;common and community property do not. Why?;2274. CHAPTER;18?THE FEDERAL GIFT AND ESTATE TAXES Question ES #18;Cole purchases land for $500,000 and transfers it by gift to his two daughters;Madison and Paige, as equal joint tenants with the right of survivorship. Ten;years later, when the land is worth $2,000,000, Madison predeceases Paige.;Madison?s executor includes none of the value of the land in her gross estate;as she contributed nothing toward its cost. Do you agree?;2275. CHAPTER;18?THE FEDERAL GIFT AND ESTATE TAXES Question ES #19;When Travis learns he is seriously ill, he transfers an insurance policy on his;life (maturity value of $2,000,000) to his wife Alexis. The couple?s adult;children are the designated beneficiaries of the policy. Has Travis acted;wisely?;2276. CHAPTER;18?THE FEDERAL GIFT AND ESTATE TAXES Question ES #20;What is the justification for the terminable interest rule that is applicable;to the marital deduction?;2277. CHAPTER;18?THE FEDERAL GIFT AND ESTATE TAXES Question ES #21;Doyle died in 2000 and by will created a trust with the following provisions;?life estate to my wife, Grace, remainder upon her death to our children.?;Grace dies in 2011. Is the trust Doyle created included in Grace?s gross;estate? Explain.;Correct;Answer;If Doyle?s;executor made the QTIP election to obtain a marital deduction for Doyle?s;estate, Grace?s gross estate must include the trust. If not, the trust is not;included.;2278. CHAPTER;18?THE FEDERAL GIFT AND ESTATE TAXES Question ES #22;Generally, property that passes to a surviving spouse that is not a U.S.;citizen does not qualify for the marital deduction.;a.;Why?;b.;How can this;result be avoided?;2279. CHAPTER;18?THE FEDERAL GIFT AND ESTATE TAXES Question ES #23;At the time of her death in an automobile accident, Laura left a modest probate;estate, most of which she had inherited from her mother several years ago.;Comment on Laura?s Federal estate tax position in connection with each of the;following points.;a.;Probate;estate versus gross estate.;b.;Credit for;the tax on prior transfers.;2280. CHAPTER;18?THE FEDERAL GIFT AND ESTATE TAXES Question ES #24;When one spouse predeceases the other, the credit for prior transfers does not;apply.;a.;Why?;b.;Under what;circumstances might the credit apply?;2281. CHAPTER;18?THE FEDERAL GIFT AND ESTATE TAXES Question ES #25;How could the ? 2513 election to split gifts help avoid the generation-skipping;transfer tax (GSTT)?

 

Paper#59262 | Written in 18-Jul-2015

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