163 what is the justification for the terminable

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South-Western Federal Taxation 2020: Individual Income Taxes
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Chapter 9 / Exercise 2
South-Western Federal Taxation 2020: Individual Income Taxes
Young/Nellen/Hoffman
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163. What is the justification for the terminable interest rule that is applicable to the marital deduction? 164. Doyle died in 2000 and by will created a trust with the following provisions: “life estate to my wife, Grace, remainder upon her death to our children.” Grace dies this year. Is the trust Doyle created included in Grace’s gross estate? Explain. 165. Generally, property that passes to a surviving spouse that is not a U.S. citizen does not qualify for the marital deduction.a.Why?b.How can this result be avoided?
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South-Western Federal Taxation 2020: Individual Income Taxes
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Chapter 9 / Exercise 2
South-Western Federal Taxation 2020: Individual Income Taxes
Young/Nellen/Hoffman
Expert Verified
166. At the time of her death in an automobile accident, Laura left a modest probate estate, most of which she had inherited from her mother several years ago. Comment on Laura’s Federal estate tax position in connection with each of the following points.a.Probate estate versus gross estate.b.Credit for the tax on prior transfers.167. When one spouse predeceases the other, the credit for prior transfers does not apply.a.Why?b.Under what circumstances might the credit apply?
CHAPTER 18--THE FEDERAL GIFT AND ESTATE TAXES Key1. Sometimes also known as transaction taxes, Federal gift and estate taxes are excise taxes.
2. A lifetime transfer that is supported by full and adequate consideration is not a gift.
3. One of the reasons the estate tax was enacted was to prevent the avoidance of the gift tax by the making of “deathbed gifts.”
4. At one point, the tax rates applicable to transfers by gift were lower than those applying to transfers by death.
5. Some states impose inheritance taxes, but the Federal tax system does not.
6. An estate tax is a tax on the right of an heir to receive property on the death of the owner.
7. A majority of states currently do not impose any tax on transfers by death.
8. In some cases, the Federal gift tax can be imposed on someone other than the donor.
9. Manuel, a citizen and resident of Argentina, makes a gift to his children of a ranch located in Colorado. Manuel will be subject to the U.S. gift tax.
10. Kim, a resident and citizen of Korea, dies during an operation at the Mayo Clinic in Rochester (MN). Because Kim died in the U.S., he will be subject to the Federal estate tax.
11. Paul, a U.S. citizen, will avoid the Federal estate tax if he becomes a Canadian resident and owns no property located in the U.S. at the time of his death.
12. Becky made taxable gifts in 1974, 2010, and 2012. In computing the gift tax on the 2012 gift, she must consider all of the prior taxable gifts.
13. For Federal estate tax purposes, the gross estate cannot include property the decedent no longer owns.
14. For Federal estate tax purposes, the gross estate does not include property that will pass to a surviving spouse.
15. For both the Federal gift and estate tax, a deduction is allowed for certain transfers to a spouse.

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