25 May Question 1. Priortoher deathin2013,Almamadethefollowinggifts.
Question
1. Priortoher deathin2013,Almamadethefollowinggifts.
FairMarketValue
| Year | Asset | DateofGift | DateofDeath |
| 2007 | Marketablesecurities | $400,000 | $900,000 |
| 2011 | Termlifeinsurancepolicy | –0– | 100,000 |
| 2011 | Unimprovedland | 900,000 | 950,000 |
Asaresultofthe2011transfer,Almapaidagifttaxof$70,000. Astothesetransactions,Alma’sgrossestate
includes:
a. $0.
b.$70,000.
c. $100,000.
d.$170,000.
e. $1,120,000.
2. In2012,Glentransferredseveralassetsbygifttodifferentpersons.Glendiesin2014.Informationregardingtheproperties givenissummarizedbelow.
FairMarketValue
| DateofGift | DateofDeath | |
| InsurancepolicyonGlen’slife | $ 20,000 | $200,000 |
| Unimprovedland | 890,000 | 900,000 |
| Stocksandbonds | 600,000 | 800,000 |
The transferof theland andthe stocksand bondsresulted inatotalgifttaxof$60,000.Astothesetransactions,
Glen’sgrossestate mustinclude:
a. $0.
b.$200,000.
c. $260,000.
d.$1,900,000.
e. $1,960,000.
ANSWER: c
3. Atthe timeofhis death,Lanceheld alifeestateintheLMTrust.UnderwhichofthefollowingcircumstanceswilltheLMTrustnotbeincludedinhisgrossestate?
a. ThetrustwascreatedbyLanceandwasrevocable.Hereleasedthepowertorevokefouryearsbeforehisdeath.
b. Thetrust wascreated byLance andis irrevocable.
c. ThetrustwascreatedbyLance’sfather.
d. ThetrustwascreatedbyLance’sdeceased wifeandtheexecutorofherestatemadeaQTIPelection.
e. Noneof theabove.
4. Atthetimeofherdeath,Meganwasinvolvedinthefollowing.
• Owned aninsurance policyon thelife ofher fatherwith areplacementcostof$250,000and maturityvalueof$800,000.ThedesignatedbeneficiaryofthepolicyisMegan’sestate.
• Wasanequal tenantin commonwith herbrother inatractoflandworth$800,000.Thelandwasinherited fromtheirgrandmother10yearsagowhenithadavalueof$200,000.
• Wasajointtenantwithhertwosistersinstockworth$1,500,000.Thestockwasinheritedfromtheirgrandmother10yearsagowhenithadavalueof$500,000.
Astothesetransactions,Megan’sgrossestatemustinclude:
a. $250,000.b.$1,150,000.
c. $1,400,000.
d.$2,150,000.
e.Noneof theabove.
5. In2005,Mandyand Hal(motherandson) purchasedlandfor $600,000asjointtenants withrightofsurvivorship. Ofthe$600,000purchaseprice,Mandy provided$300,000andHal$300,000 (ofwhich$200,000hadbeen receivedasagiftfromMandy).In2013,Haldiesfirstwhenthelandisworth$3,000,000.Astotheland,Hal’sgrossestatemustinclude:
a. $500,000.
b.$1,500,000.
c. $2,500,000.
d.$3,000,000.
e.Noneof theabove.
6. In2005,Thaliapurchaseslandfor $900,000andliststitleinthe namesofherdaughtersasfollows:“April andTheresa, jointtenantswithrightofsurvivorship.”In2007,April andTheresapurchaseanapartmentbuildingfor$1millionasequaltenantsincommon;Aprilfurnished$400,000andTheresafurnished$600,000ofthecost. Aprildiesfirstin 2013whenthe landisworth $1.5million andthe apartmentbuildingis worth$2 million.One oftheresults ofthese transactionsis:
a. Aprilmade agifttoTheresaof$100,000in2007.
b. Noneof theland isincluded inApril’s grossestate.
c. April’sgrossestateincludes$800,000(40%×$2million)astotheapartmentbuilding.
d. April’sgross estateincludes $1,750,000asto theseproperties.
e. Noneof theabove.
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