Discussion Question 1-20 Federal Gift Tax - Availability of the Marital Deductio
ID: 2349855 • Letter: D
Question
Discussion Question 1-20 Federal Gift Tax - Availability of the Marital Deduction for Transfers between Spouses (LO. 4) Jake (age 72) and Jessica (age 28) were recently married. To avoid any transfer taxes, Jake has promised to leave Jessica all of his wealth when he dies. Is Jake under some misconception about the operation of the Federal gift and estate taxes? Select "Yes or No", whichever is applicable. a. Jake is correct. The marital deduction allows interspousal transfers at death free of any tax but does not apply to lifetime gifts. SelectYesNo b. Jake is incorrect. The marital deduction allows interspousal transfers (whether by gift or at death) free of any tax (either gift or estate). SelectYesNo c. Jake is incorrect. The marital deduction allows interspousal transfers by gift free of any tax but does not apply to transfers at death. SelectYesNoExplanation / Answer
Discussion Question 1-20 Federal Gift Tax - Availability of the Marital Deduction for Transfers between Spouses (LO. 4) Jake (age 72) and Jessica (age 28) were recently married. To avoid any transfer taxes, Jake has promised to leave Jessica all of his wealth when he dies. Is Jake under some misconception about the operation of the Federal gift and estate taxes? Select "Yes or No", whichever is applicable.
c. Jake is incorrect. The marital deduction allows interspousal transfers by gift free of any tax but does not apply to transfers at death. Yes
This would be considered an estate tax and a federal gift tax. Depending on how muchJake has already used of his federal gift allowance this could still cost him a lot. He isonly allowed an annual exclusion of $13,000 to Jessica depending on the state he livesin because they are married they could be completely exempt from any of these taxations.