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Which of the following is (are) among the exceptions to the general rule that property given within three years of death is excluded from the donor’s gross estate for federal estate tax purposes?

I Life insurance

II Gift taxes paid on the value of a gift

III Farm land gifted to a son or daughter

A. I only

B. I and II only

C. II and III only

D. I, II and III

Provide a detailed explanation. This is estate planning.

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Jean Keeling
Jean KeelingLv2
29 Sep 2019
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Related questions

All the following statements concerning the income, estate, and gift tax consequences of a net gift are correct EXCEPT:

A. The donor will have taxable income to the extent the donee’s payment of gift tax exceeds the donor’s adjusted basis in the gift property.

B. Because the donee pays the gift tax, the donor does not use up any of his or her unified credit.

C. Gift taxes paid by the donee will reduce the amount of the taxable gift.

D. The net amount of the gift is treated as an adjusted taxable gift in the calculation of the donor’s estate tax at the time of the donor’s death.

Can you provide a detailed explanation for your answer? Please only answer if you have a strong background in estate planning.

1. “A” is in the 28% marginal income tax bracket. He acquired 400 shares of XYZ Inc. Common stock two years ago for $60,000, but the stock’s current market value is $45,000. “A” plans to give 200 shares of the stock to each of his two granddaughters. Rowena is age 19 and Susan is age 12. Under these circumstances, all of the following statements are correct EXCEPT:

A. If “A” makes the gifts to the children, he will lose the tax benefit of the $15,000 loss available if he sold the stock.

B. “A” can use the $14,000 annual exclusion for both stock gifts.

C. If the grandchildren sell the stock immediately after receiving the stock, they both may take a loss based on “A’s” cost basis.

D. If Rowena keeps her stock, any dividends will be taxable at her marginal income tax bracket.

E. If Susan keeps her stock, any dividends in excess of $1,800 will be taxable at her parent’s marginal income tax bracket.

2. Which of the following statements correctly identify(ies) significant differences between UGMA and UTMA?

I. UGMA places no restrictions on types of property that may be transferred, whereas UTMA does place restrictions.

II. UGMA permits both lifetime and testamentary transfers, but UTMA permits only testamentary transfers.

A. I only

B. II only

C. Both I and II

D. Neither I nor II

3. Which of the following statements concerning the “gross-up” rule is (are) correct?

I. Income taxes paid in the year of death are includible in the deceased’s gross estate.

II. Gift taxes paid in the year of death are included in the deceased’s gross estate.

III. Life insurance given in the year prior to the year of death is excluded from the deceased’s gross estate.

A. I only

B. II only

C. I and II only

D. II and III only

4. All the following statements concerning the income, estate, and gift tax consequences of a gift to a 2503(c) trust for a minor are correct EXCEPT:

A. The income can be accumulated in the trust, but if the income exceeds $2,100 it is taxable to the minor at the parent’s marginal tax bracket.

B. The fair market value of the assets up to $14,000 can qualify for the gift tax annual exclusion.

C. The “throwback” rules do not apply to income accumulated before the minor reaches age 21.

D. Assets transferred to the trust are not includible in the donor’s gross estate for federal estate tax purposes if the donor is not the trustee.

5. A gift of a partial or future interest in property is generally nondeductible.However, there are specific exceptions.A current deduction is available for all the following contributions to a qualified organization EXCEPT:

A. The gift of a remainder interest in a personal residence or farm with the stipulation that the donor may continue to reside there for his or her lifetime.

B. The gift of a remainder interest in real property granted only for conservation purposes.

C. The gift of a remainder interest in tangible personal property with the stipulation that the donor may retain possession of the property during his or her lifetime.

D. The gift of a remainder interest in property where the donor retains an income interest, provided the gift is transferred in trust.

A life insurance trust is often named the beneficiary of the life insurance policies it holds for which of the following reasons?

I It can provide greater flexibility than is available under insurance settlement options.

II It can eliminate a second estate tax upon the death of the beneficiaries.

III It can incorporate special limitations and restrictions on the funds designed to be paid to specific beneficiaries.

A. I only

B. I and II only

C. II and III only

D. I, II and III

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