2. The more complete the transfer, the more likely tax goals
will be accomplished.
5. Larry just completed signing all the documents and
transferring stocks and bonds worth $400,000 in trust to Martin.
The irrevocable trust terms require the income to be accumulated or
distributed to John and Jane in such portion as Martin thinks
reasonable. When both John and Jane are deceased the trust is to
terminate and the assets distributed to Wally. Wally's right to
receive the assets upon termination make him the:
|
reversionary interest
holder. |
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ultimate permissible
appointee. |
9. In UPC states an omitted child who is born after his or her
parent's will was executed has better claim to a portion of the
decedent's estate than an omitted child who was alive when it was
executed.
10. In states that have adopted the UPC, a divorce automatically
revokes an insurance beneficiary designation to the ex-spouse when
such designation was made prior to the divorce.
11. Carl had four children, Martha, Terry, Ann, and Rick. Martha
and Rick predeceased Carl. Martha has one child surviving. Rick has
five surviving children. Terry has two surviving children and Ann
has one surviving child. There are no great-grandchildren. If
Carl's estate is left per capita at each generation to his issue,
each of Rick's children will receive what fraction of Carl's
estate?
12. Some community property states, such as California, allow
property owned by the decedent to pass to a surviving spouse
without being probated.
13. States adopting the UPC require a per capita at each
generation distribution rather than per stirpes where there are
issue surviving but no spouse.
14. For the all gift tax problems use the following annual
exclusions: $10,000 for pre-2002; $11,000 for 2002 - 2005; $12,000
for 2006-2008. At the time these problems are written it is
uncertain whether the exclusion will reach $12,000 in 2006 or 2007
but the guess is in 2006.
In 2005, Juantonio made a $1,250,000 gift ($1,240,000 taxable)
to his brother and paid gift taxes of $. Two years later (2007) he
gave his parents a home worth $754,000. Determine the gift tax for
2007:
15. For transfer taxes, a credit of $1 and a deduction of $1
imply the same tax saving.
16. For the all gift tax problems use the following annual
exclusions: $10,000 for pre-2002; $11,000 for 2002 - 2005; $12,000
for 2006-2008. At the time these problems are written it is
uncertain whether the exclusion will reach $12,000 in 2006 or 2007
but the guess is in 2006.
Maria died in 2006 leaving her entire estate to her three
children. The value of her property was $3,340,000. The total debts
and expenses deducted on the estate tax return were $220,000. The
estate tax is:
17. In 2007, the estate tax for a taxable estate of $2,010,000
(with no prior taxable gifts) is $1,800, because subtracting the
$2,000,000 applicable exclusion amount leaves just $10,000 subject
to taxation at the marginal tax rate of 18 percent.
18. D transferred a term life insurance policy (on his own life)
to the trustee of an irrevocable life insurance trust two years
before he died. D had neither retained interests nor any power to
appoint the corpus of the trust. The policy was worth only $100
when he transferred it. The trustee collected $7,000 when D
died.
Select the letter corresponding to the IRC section which causes
all or a portion of the property, or of the gift tax paid, to be
included in the decedent's gross estate. If both 2035(a) and 2036
&/or 2038 apply select 2035(a). Note, IRC 2036 &/or 2038
are listed together because they often overlap.
(1)IRC section 2035(a) which requires inclusion of certain
transfers made within three years of death.
(2)IRC section 2035(b) which requires grossing up of certain gift
taxes.
(3)IRC section 2036 which requires inclusion of transfers with
retained life estate, etc. or IRC section 2038 which requires
inclusion of revocable transfers, etc.
(4)IRC section 2041 which requires inclusion of property over which
one has a general power of appointment.
(5)None of the above apply and the property is not part of the
decedent's gross estate.
19. Tara transferred stock to her minor daughter using the
state's Uniform Transfer to Minor's Act provisions to complete the
gift. Six years later, while still acting as custodian of the gift,
Tara died.
Select the letter corresponding to the IRC section which causes
all or a portion of the property, or of the gift tax paid, to be
included in the decedent's gross estate. If both 2035(a) and 2036
&/or 2038 apply select 2035(a). Note, IRC 2036 &/or 2038
are listed together because they often overlap.
(1)IRC section 2035(a) which requires inclusion of certain
transfers made within three years of death.
(2)IRC section 2035(b) which requires grossing up of certain gift
taxes.
(3)IRC section 2036 which requires inclusion of transfers with
retained life estate, etc. or IRC section 2038 which requires
inclusion of revocable transfers, etc.
(4)IRC section 2041 which requires inclusion of property over which
one has a general power of appointment.
(5)None of the above apply and the property is not part of the
decedent's gross estate.
20. Just eight months before he died, D transferred land with a
small house on it to X. It was worth a little over $2 million at
the time and D paid the $435,000 in gift taxes. Toxic waste was
discovered on the land shortly before D died so it was valued at
just $500,000 at the time of D's death.
Select the letter corresponding to the IRC section which causes
all or a portion of the property, or of the gift tax paid, to be
included in the decedent's gross estate. If both 2035(a) and 2036
&/or 2038 apply select 2035(a). Note, IRC 2036 &/or 2038
are listed together because they often overlap.
(1)IRC section 2035(a) which requires inclusion of certain
transfers made within three years of death.
(2)IRC section 2035(b) which requires grossing up of certain gift
taxes.
(3)IRC section 2036 which requires inclusion of transfers with
retained life estate, etc. or IRC section 2038 which requires
inclusion of revocable transfers, etc.
(4)IRC section 2041 which requires inclusion of property over which
one has a general power of appointment.
(5)None of the above apply and the property is not part of the
decedent's gross estate.
21. Ila transferred separate property term insurance policy on
her life to the independent trustee of an irrevocable life
insurance trust. The terms of the trust create a life estate for
Ila's husband and remainder to their children. The policy had a
face (proceeds) amount of $200,000. Ila continued to pay the
premiums on the policy and died five years after the transfer. All,
or a portion, of the proceeds are in Ila's estate because:
Select the letter corresponding to the IRC section which causes
all or a portion of the property, or of the gift tax paid, to be
included in the decedent's gross estate. If both 2035(a) and 2036
&/or 2038 apply select 2035(a). Note, IRC 2036 &/or 2038
are listed together because they often overlap.
(1)IRC section 2035(a) which requires inclusion of certain
transfers made within three years of death.
(2)IRC section 2035(b) which requires grossing up of certain gift
taxes.
(3)IRC section 2036 which requires inclusion of transfers with
retained life estate, etc. or IRC section 2038 which requires
inclusion of revocable transfers, etc.
(4)IRC section 2041 which requires inclusion of property over which
one has a general power of appointment.
(5)None of the above apply and the property is not part of the
decedent's gross estate.
22. A taxable gift of life insurance will arise at the insured's
death whenever the insured, the owner, and the beneficiary are
three different parties.
23. A commercial annuity contract purchased by Don and given to
his niece, Bernice, is a gift partly of a present interest and
partly of a future interest because payments are spread out over a
period of years.
24. On January 1, 2006, Bell died. His will left "$120,000 to
Sara Smith, but if she predeceases me, then to her issue by right
of representation." On June 10, 2006, Sara wrote Bell's executor
the following note, "I don't need Bell's money, give it my kids,
Kevin, Diane, and David. Signed, Sara Smith" Kevin, Diane, and
David are Sara's only children. Which of the following are true
statements?
(1)If Sara had waited more than nine months after Bell's death,
the law will not allow her to give up her right to the
inheritance.
(2)Sara has made a taxable gift of $40,000 to each child, no annual
exclusion is allowed, because the probate must close before the
children get the money.
(3)Sara has made a taxable gift of $30,000 to each child, their
interests vest immediately, hence an annual exclusion.
(4)The disclaimer is tax effective even though it directs the
transfer, since the children are next in line anyway according to
Bell's will.
|
(1), (2), and (3) only are
correct. |
|
(1) and (3) only are
correct. |
|
(2) and (4) only are
correct. |
25. In 2007, Max gave each to his three children property worth
$130,000 ($390,000 total). His wife, Mindy, gave $6,000 of her own
property to one of the children. Assuming gift splitting, and no
other gifts, Max's gift tax return will report taxable gifts of
ekkarill92 answered 1 year ago