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Exam 25: Transfer Taxes and Wealth Planning

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Question 51

True/False

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The probate estate will include the total value of all real property owned by the decedent at the time of death regardless of whether the decedent co-owned the property as a tenant in common or as a joint tenant with the right of survivorship.

A) True
B) False

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Question 52

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The gift-splitting election only applies to gifts made by taxpayers who reside in community-property states.

A) True
B) False

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Question 53

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Matthew and Addison are married and live in Michigan,a common-law state.For the holidays Addison gave cash gifts of $40,000 to each of her two sons,and Matthew gave $40,000 to his daughter.What is the amount of Addison's taxable gifts if Matthew and Addison opt to gift-split?

The federal transfer taxes are calculated using cumulative lifetime transfers.

The gross estate includes the value of half of real property owned by a decedent and spouse in joint tenancy with the right of survivorship.

The gross estate always includes the value of half of any real property owned by a decedent and another person in joint tenancy with the right of survivorship.

At his death in 2019,Nathan owned the following property: The real estate is subject to a $1,700,000 mortgage and Nathan made taxable gifts in 2009 totaling $2 million,at which time he offset the gift tax with an applicable credit (exemption equivalent of $2 million).Nathan has never been married.What is the amount of his estate tax due? (Use Exhibit 25-1.)

Chloe's gross estate consists of the following property valued at the date of death: Chloe's real estate is encumbered by a mortgage of $450,000,and Chloe's executor paid her funeral costs of $6,000 and charged fees for $24,000.Which of the following is a true statement?

Alexis transferred $400,000 to a trust with directions to pay income to her spouse,William,for his life.After William's death the corpus of the trust will pass to William's son.If the life estate is valued at $72,000,what is the total amount of the taxable gifts?

A couple who is married at the time of completing a gift can elect to file a joint gift tax return.

Which of the following transfers is a complete gift?

Harold and Mary are married and live in a community-property state.During the marriage Harold bought a parcel of real estate for $100,000 in community funds and titled the property in his name alone.Mary died on January 30^th of this year and was survived by Harold,who did not remarry.The parcel of real property was worth $250,000 on January 30^th of this year but was only worth $220,000 at year-end.What amount,if any,is included in Mary's gross estate?

A trust is a legal entity whose purpose is to hold and administer property for the benefit of beneficiaries.

Property inherited from a decedent has an adjusted basis equal to the value of the property included in the decedent's estate.

The calculation of the value of a life estate in a trust generally does not depend upon which of the following factors?

A serial gift strategy uses multiple gifts to maximize the value of the annual exclusion.

A withdrawal of money from a bank account held in joint tenancy with the right of survivorship may constitute a complete gift.

The exemption equivalent was repealed in 2010.

At his death Tyrone's life insurance policy paid his estate $85,000.What amount,if any,is included in Tyrone's gross estate?

The tax on cumulative taxable gifts is reduced by the applicable credit regardless of whether any applicable credit was used in prior years.