2210. CHAPTER 18—THE FEDERAL GIFT AND ESTATE TAXES Question MC #11 In which if any of the following independent situations has Jean made a gift? a. Jean gives her 19-year old son $20 000 to be used by him for his college expenses. b. Jean buys her grandfather a new $120 000 RV for his birthday. c. Jean sends $14 000 to Temple University to cover her nephew’s tuition. The nephew does not qualify as Jean’s dependent. d. Jean contributes $10 000 to her Congressman’s reelection campaign. e. None of the above. 2211. CHAPTER 18—THE FEDERAL GIFT AND ESTATE TAXES Question MC #12 In which if any of the following independent situations has Fred made a gift? a. Fred established a revocable trust income payable to himself for life and upon his death remainder to his children. b. Fred dies owning a U.S. savings bond with ownership listed as: “Fred payable to Sue on Fred’s death.” Sue redeems the bond. c. Fred sends $25 000 to Alice’s oral surgeon in payment of her dental implants. Alice is Fred’s sister and does not qualify as his dependent. d. Fred pays Eva $800 000 in a property settlement of her marital rights. One month later Fred and Eva are divorced. e. None of the above. 2212. CHAPTER 18—THE FEDERAL GIFT AND ESTATE TAXES Question MC #13 In which of the following situations has a gift occurred? a. Heidi creates a revocable trust income payable to herself remainder to her children. b. Herman establishes a joint savings account with his sister. c. After Herman’s death his sister withdraws the funds he placed in their joint savings account. d. The day before their marriage Eva gives Arlan $500 000 in securities. e. None of the above. 2213. CHAPTER 18—THE FEDERAL GIFT AND ESTATE TAXES Question MC #14 Stacey inherits unimproved land (fair market value of $6 million) from her father on June 1 2010. Martha disclaims her interest in the property as follows: one-third on December 1 2010; one-third on January 3 2011; and the remaining one-third on May 31 2011. In all cases the disclaimers pass the interest to her son (the next heir under state law). The Federal gift tax applies to Stacey for: a. All of the disclaimers. b. The disclaimer made in 2010. c. The disclaimers made in 2011. d. The May 31 2011 disclaimer. e. None of the disclaimers. 2214. CHAPTER 18—THE FEDERAL GIFT AND ESTATE TAXES Question MC #15 Before his nephew (Dean) leaves for college Will loans him $400 000. Dean signs a note promising to repay the loan in five years. No interest element is provided. Which if any of the following is a tax consequence of this arrangement? a. Will has not made a gift to Dean of the interest element. b. Will has an interest expense deduction as to the interest element. c. Dean has interest income as to the interest element. d. Dean may be allowed an income tax deduction as to the interest element. e. None of the above. 2215. CHAPTER 18—THE FEDERAL GIFT AND ESTATE TAXES Question MC #16 Which of the following statements relating to the Federal gift tax is incorrect? a. The deemed paid credit allowed for a prior taxable gift cannot be less than the gift tax that was actually paid. b. The issuance of an effective disclaimer by an heir will pass the property to another without being subject to the Federal gift tax. c. The annual exclusion is not available for gifts of future interests. d. Up to 5 years of annual exclusions can be available for gifts involving § 529 plans (qualified tuition programs). e. None of the above. 2216. CHAPTER 18—THE FEDERAL GIFT AND ESTATE TAXES Question MC #17 Concerning the election to split gifts under § 2513 which of the following statements is incorrect? a. The election can be made even if the parties are not married for the entire year of the gift. b. The election does not take into account any prior taxable gifts made by either spouses. c. The election doubles the number of annual exclusions available. d. The election has utility in a community property jurisdiction. e. The election can be made even if the parties are divorced as long as neither spouse has remarried by the end of the year. 2217. CHAPTER 18—THE FEDERAL GIFT AND ESTATE TAXES Question MC #18 Which if any of the following is a correct statement regarding the filing of a gift tax return (Form 709)? a. A donor must file a Form 709 in the same year in which the gift was made. b. The due date of a Form 709 is the same as the due date of the donor’s Form 1040. c. A Form 709 may have to be filed even though the value of the gift was less than the amount of the annual exclusion. d. Melody gives her husband a new Mercedes convertible for his birthday. Melody must file a Form 709 to report the gift even though no gift tax results. e. None of the above. 2218. CHAPTER 18—THE FEDERAL GIFT AND ESTATE TAXES Question MC #19 Mark dies on March 3 2011. Which if any of the following items is not included in his gross estate? a. Interest earned (after death) on City of Cleveland bonds. b. Cash dividend on stock owned by Mark—declaration date was February 4 2011 and record date was March 2 2011. c. Federal income tax refund for 2010—received on March 4 2011. d. Insurance recovery on auto accident that occurred on February 25 2011. e. Insurance recovery from theft of sailboat on March 1 2011. 2219. CHAPTER 18—THE FEDERAL GIFT AND ESTATE TAXES Question MC #20 Andrea dies on April 30 2011. Which if any of the following items is included in her gross estate? a. Rents for the month of May (received on May 2) on an apartment building she owned. The alternate valuation date of § 2032 is not elected. b. Rents for the month of May (received on May 2) on an apartment building she owned. The alternate valuation date of § 2032 is elected. c. Insurance recovery from a fire which occurred on November 1 2010 and destroyed Andrea’s residence. d. A loan made by Andrea to her daughter (who is a successful dentist) and forgiven by Andrea in her will. e. Choices c. and d. but not a. and b.
