In 1995, Thalia Purchases Land for $900,000 and Lists Title

question 64

Multiple Choice

In 1995, Thalia purchases land for $900,000 and lists title in the names of her daughters as follows: "April and Theresa, joint tenants with right of survivorship." In 1999, April and Theresa purchase an apartment building for $1 million as equal tenants in common; April furnished $400,000 and Theresa furnished $600,000 of the cost. In the current year, April dies first in 2011 when the land is worth $1.5 million and the apartment building is worth $2 million. One of the results of these transactions is:

• A) April made a gift to Theresa of $100,000 in 1999.
• B) None of the land is included in April's gross estate.
• C) April's gross estate includes $800,000 (40% ´ $2 million) as to the apartment building.
• D) April's gross estate includes $1,750,000 as to these properties.
• E) None of the above.

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Definitions:

Federal Funds Rate

The interest rate at which depository institutions trade federal funds (balances held at Federal Reserve Banks) with each other overnight.

Inflation Rate

The percentage change in the price level of goods and services in an economy over a given period of time.

Prime Interest Rate

The interest rate that commercial banks charge their most creditworthy customers, often used as a benchmark in lending rates.

Equation of Exchange

An economic formula representing the relationship between the supply of money in an economy and the level of prices of goods and services, expressed as M*V = P*T.