Jacob makes a gift of property basis of 100000 fair market value of 500000 to

Jacob makes a gift of property basis of 100000 fair

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31. Jacob makes a gift of property (basis of $100,000; fair market value of $500,000) to his aunt, Mary. Ten months later and when the property is worth $550,000, Mary dies. Under Mary’s will, the property passes to Isabella (Jacob’s wife). Isabella’s basis in the property is $550,000. True False 32. Jim makes a gift of property (basis of $800,000; fair market value of $600,000) to his wife, Molly. Six months later Molly dies, and under her will, the property (now worth $700,000) returns to Jim. Jim’s income tax basis in the property now is $800,000. 33. If a traditional IRA is subject to both estate and income taxes, a withdrawal by the heir constitutes income in respect of a decedent (IRD).
34. The special use valuation method of § 2032A is available for valuing transfers by gift. 35. Joan made taxable gifts of cash in 2010 and 2011. If Joan dies in 2012, for § 2032A purposes both gifts are considered in meeting the special use valuation tests. True False 36. The Nelsons make gifts of appreciated securities to their dependent daughter (age 20) and son (age 21), neither of which is a student. If the children sell the securities shortly thereafter, the kiddie tax will not apply to tax the gain at the parents’ tax rate. 37. Passing installment notes by death will avoid any income tax on the deferred gain. 38. Neither the transfer by gift or by death avoids the recognition (for income tax purposes) of any deferred interest on U.S. savings bonds. 39. A gift of installment notes causes any deferred gross profit on the notes to be taxed to the donees. True False 40. If depreciable property is transferred by gift, any depreciation recapture potential carries over to the donee. 41. If depreciable property is passed by death, any depreciation recapture potential carries over to the heir. 42. Under Cindy’s will, her share of their community property passes to Van, her surviving spouse. Cindy’s property is not subject to probate.
43. Harvey owns a certificate of deposit listed as: “Harvey, payable on proof of death to April.” On Harvey’s prior death, the CD is notsubject to probate. True False 44. Paula owns an insurance policy on her life payable to her estate. On Paula’s death, the insurance proceeds are included in her gross estate but not her probate estate. 45. Walt owns an insurance policy on his life with Doris as the designated beneficiary. On Walt’s prior death, the proceeds of the policy are not part of his probate estate.

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