Question

Identify which of the following statements is false   

A. The Lifetime Exemption applies only to gifts given.
B. Casualty or theft losses incurred during the administration of the estate are deductible on the estate tax return.
C. The estate tax return is due, ignoring extensions, 9 months after the decedent's date of death.   

Which of the following transactions constitutes a taxable gift made by Ellen, a widow, in the current year?      
A. Ellen transfers $60,000 to a bank account with Hazel. Hazel does not contribute any money to the account.
B. Ellen deposits $100,000 cash and Dennis deposits $5,000 cash into a joint savings account. Dennis withdraws $20,000.
C. Ellen gives her church $15,000.
D. Ellen pays the hospital medical bills for her friend Paige directly to the hospital.

On February first of this year, Hall learned that he was bequeathed 500 shares of common stock under his father's will. Hall's father had paid $2,500 for the stock 10 years ago and the fair market value of this stock at the date of his father's death was $4,500. However, the stock decreased six months later to a value of $4.000. The executor of the estate elected the alternate valuation date for estate tax purposes. Hall sold the stock later in the year for $4,200. How much gain or loss must Hall include in this tax return for the 500 shares sold?  

A. $200 LTCG  
B. $300 LTCL      
C. $200 STCG

In 2018, Bill gave $60,000 to his sister to pay medical bills; $40,000 to his father to help with household expenses, and $20,000 to his adult son. Bill and his wife elect gift splitting. What is the total of Bill's' taxable gifts (remember the change in the 2018 annual exclusion)?       
A. none
B. $15,000  
C. $20,000  
D. $60,000

Mary Jones died in 2017 with a taxable estate of $6,000,000. What is her estate tax liability?
A. $204,000
B. $2,400,000      
C. $220,000

Vincent makes the following property transfers in the current year.
·    $20,000 for tuition given to the grandson
·    $1,000 medical expense for a child paid directly to a hospital\
·    $500 donation to the Democratic party
·    $10,000 property settlement in conjunction with a divorce
Vincent's gifts for the year before considering the annual gift tax exclusion total
A. $0
B. $21,000      
C. $20,000  

Betty dies on February 20 of the current year. Her estate consisted of the following assets, all valued as of her date of death:
Stock with a basis of $40,000 and a fair market value of $200,000. The stock was purchased in Joint Tenancy with her sister, with Betty paying all of the purchase price.
Land valued at $1,500,000 and a basis of $490,000. The land was purchased with her brother in Joint Tenancy, with her brother paying 60% of the purchase price.
Cash of $70,000

What is Betty’s gross estate?      
$870,000.  
$1,770,000.  
$1,670,000.

Answer 1

The answer options provided for Question 1 are not complete as all the three are True. One False Option is missing. Therefore, I have answered the second related to Ellen as multiple questions have been posted.

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Question 2: (the question has been answered assuming the tax year is 2017)

Ellen deposits $100,000 cash and Dennis deposits $5,000 cash into a joint savings account. Dennis withdraws $20,000. (which is Option B)

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Explanation:

1) Simply transferring money to a bank account doesn't amount to a gift till the time any withdrawal is made by the other account holder. In the given case, Hazel has not made any withdrawal and therefore, the transfer of $60,000 cannot be considered as a taxable gift.

2) Dennis has made a withdrawal of $20,000 which is $15,000 (20,000 - 5,000) in excess of the contribution made to the joint savings account. As per the annual exclusion limits for the year 2017, any withdrawal made by the account holder (whose contribution is significantly less than that of the other holder) in excess of $14,000 as reduced by his/her contribution will be treated as a taxable gift in the hands of the other account holder (who has made a major contribution to the account).

3) There is no annual exclusion limit on the amount paid to qualified charitable organizations which includes churches. Therefore, the amount of $15,000 will not be treated as a taxable gift.

4) There is no annual exclusion limit to the amount paid for medical expenses of another person if such amount is directly paid to the hospital/medical institution. Therefore, this payment will not be treated as a taxable gift.