Question 1

Explain why living trusts are popular tax-planning vehicles.

Accepted Answer

Revocable trusts, sometimes called living trusts, are popular arrangements from a nontax standpoint because assets held by a revocable trust pass outside of probate. Advantages of avoiding probate include lower probate costs and easier administration for real property owned in a state that is not the decedent's state of domicile. In addition, unlike a will, a revocable trust is not a matter of public record.

Question 2

Melissa transferred $650,000 in trust in 2006: income for life to herself, the remainder to her son. What part, if any, of the value of the trust's assets will be included in Melissa's estate?

Accepted Answer

The entire trust will be included since she retained the income from the trust until her death.

Question 3

Betty dies on February 20, 2013. Her estate consisted of the following assets, all valued as of her date of death: Stock with a basis of $40,000 and a fair market value of $200,000
Home valued at $1,500,000 and a basis of $490,000
Cash of $70,000
Life insurance on Betty's life owned by her daughter with a $500,000 face value
What is Betty's gross estate?

Accepted Answer

A)  $600,000 
B)  $1,100,000 
C)  $1,770,000 
D)  $2,270,000 
A)  $600,000 
B)  $1,100,000 
C)  $1,770,000 
D)  $2,270,000 C

Question 4

At Mark's death, Mark owed a debt of $40,000 plus $2,000 of accrued interest. Mark's funeral expenses were $5,000, and Mark's charge card had a balance due of $400. The expected administration costs for the estate are $2,000. Assume the estate will owe no income taxes in the next few years and that the taxable estate is expected to be in excess of $1 million. What amount should the estate deduct?

Accepted Answer

All the expenses are deductible: $40,000

Question 5

Four years ago, David gave land to Mike that he purchased for $70,000, which is presently worth $100,000. Three years ago, Mike exchanged the land (then worth $150,000) along with a $100,000 cash contribution made by David for a new piece of land worth $250,000. The new land is titled with David and Mike as joint tenants with the right of survivorship. When Mike dies this year, the land is worth $300,000. Mike's estate will include

Accepted Answer

A)  $0. 
B)  $150,000. 
C)  $180,000. 
D)  $300,000. 
A)  $0. 
B)  $150,000. 
C)  $180,000. 
D)  $300,000.

Question 6

The FMV of an asset for gift or estate tax purposes is the same except for

Accepted Answer

A)  marketable securities. 
B)  land. 
C)  life insurance policies. 
D)  patents. 
A)  marketable securities. 
B)  land. 
C)  life insurance policies. 
D)  patents.

Question 7

An executor may elect to postpone payment of the estate tax attributable to a remainder or reversionary interest until 6 months after the interests of the other person(s) terminate.

Accepted Answer

A) True 
 B)False

Question 8

A stock redemption to pay death taxes under Sec. 303 is generally treated as

Accepted Answer

A)  a sale or exchange of property. 
B)  a dividend. 
C)  a return of capital. 
D)  ordinary income. 
A)  a sale or exchange of property. 
B)  a dividend. 
C)  a return of capital. 
D)  ordinary income.

Question 9

The payment date for estate taxes may be extended by the IRS for all of the following reasons except

Accepted Answer

A)  the estate includes a 40% interest in a closely held business. 
B)  the estate includes a relatively large remainder or reversionary interest. 
C)  the executor of the estate shows reasonable cause. 
D)  All are valid reasons. 
A)  the estate includes a 40% interest in a closely held business. 
B)  the estate includes a relatively large remainder or reversionary interest. 
C)  the executor of the estate shows reasonable cause. 
D)  All are valid reasons.

Question 10

Sasha gives $1,000,000 to her granddaughter. Sasha has used all of her unified credit and is in the 40% marginal gift tax bracket; ignore the annual exclusion and exemption. What is the amount of her tax on this transfer?

Accepted Answer

A)  $450,000 
B)  $400,000 
C)  $1,450,000 
D)  $652,500 
A)  $450,000 
B)  $400,000 
C)  $1,450,000 
D)  $652,500

Question 11

Identify which of the following statements is true.

Accepted Answer

A)  The unified credit is the only credit common to both the gift and estate tax computation. 
B)  For estate tax purposes, publicly traded stocks are valued at their closing price on the date of death. 
C)  Stocks traded on a stock exchange are valued at the closing price for the date of death unless the alternate valuation date is elected. 
D)  All of the above are false. 
A)  The unified credit is the only credit common to both the gift and estate tax computation. 
B)  For estate tax purposes, publicly traded stocks are valued at their closing price on the date of death. 
C)  Stocks traded on a stock exchange are valued at the closing price for the date of death unless the alternate valuation date is elected. 
D)  All of the above are false.

Question 12

Identify which of the following statements is true.

Accepted Answer

A)  If spouses are the only joint owners, only one-half of the value of the jointly owned property is included in the gross estate, regardless of the relative amount of consideration provided by either spouse. 
B)  Special powers of appointment give the power holder less restricted powers than a general power of appointment. 
C)  The gross estate does not include the value of life insurance policies on the decedent if the proceeds are receivable by the executor or for the benefit of the estate. 
D)  All of the above are false. 
A)  If spouses are the only joint owners, only one-half of the value of the jointly owned property is included in the gross estate, regardless of the relative amount of consideration provided by either spouse. 
B)  Special powers of appointment give the power holder less restricted powers than a general power of appointment. 
C)  The gross estate does not include the value of life insurance policies on the decedent if the proceeds are receivable by the executor or for the benefit of the estate. 
D)  All of the above are false.

Question 13

Ray died on March 4. His estate includes some stock and a parcel of land. The stock is still owned by the estate on September 4, but the land is sold on August 30. If Ray's executor elects the alternate valuation date, what values would be used for estate tax purposes for the stock and the land?

Accepted Answer

Stock value on Septe

Question 14

Taxpayers can avoid the estate tax by making gifts at least a year prior to death.

Accepted Answer

A) True 
 B)False

Question 15

The estate tax return is due, ignoring extensions, 3-1/2 months after the decedent's date of death.

Accepted Answer

A) True 
 B)False

Question 16

One of the major problems facing executors in managing the estate is

Accepted Answer

A)  identifying deductions. 
B)  liquidity. 
C)  the unified credit computation. 
D)  determining the method to value assets. 
A)  identifying deductions. 
B)  liquidity. 
C)  the unified credit computation. 
D)  determining the method to value assets.

Question 17

Identify which of the following statements is false.

Accepted Answer

A)  Special use valuation is available for farmland to help alleviate liquidity problems. 
B)  The transferee is liable for the generation-skipping transfer tax (GSTT) in the case of a direct skip. 
C)  The generation-skipping transfer tax (GSTT) is imposed to assure that some form of transfer taxation is imposed once a generation. 
D)  A direct skip skips one or more generations. 
A)  Special use valuation is available for farmland to help alleviate liquidity problems. 
B)  The transferee is liable for the generation-skipping transfer tax (GSTT) in the case of a direct skip. 
C)  The generation-skipping transfer tax (GSTT) is imposed to assure that some form of transfer taxation is imposed once a generation. 
D)  A direct skip skips one or more generations.

Question 18

In 2018, the basic exclusion amount for an estate tax return is $10,000,000 before taking into account necessary inflation adjustments.

Accepted Answer

A) True 
 B)False

Question 19

Identify which of the following statements is false.

Accepted Answer

A)  Annuities not related to employment are valued in the gross estate at the cost of a comparable contract multiplied by a fraction that represents the portion of the purchase price that the decedent has contributed. 
B)  If an annuity ceases payments with the death of the decedent and nothing is to be received by any other party, the annuity is included in the gross estate. 
C)  When persons other than spouses own property jointly, the amount included in the joint owner's gross estate is measured in accordance with the consideration the decedent furnished to purchase the property. 
D)  Statements A and C are true. 
A)  Annuities not related to employment are valued in the gross estate at the cost of a comparable contract multiplied by a fraction that represents the portion of the purchase price that the decedent has contributed. 
B)  If an annuity ceases payments with the death of the decedent and nothing is to be received by any other party, the annuity is included in the gross estate. 
C)  When persons other than spouses own property jointly, the amount included in the joint owner's gross estate is measured in accordance with the consideration the decedent furnished to purchase the property. 
D)  Statements A and C are true.

Question 20

For 2014, the unified credit is equivalent to a statutory exemption of

Accepted Answer

A)  $1,000,000. 
B)  $1,500,000. 
C)  $780,800. 
D)  $5,340,000. 
A)  $1,000,000. 
B)  $1,500,000. 
C)  $780,800. 
D)  $5,340,000.

Explain why living trusts are popular tax-planning vehicles.

Melissa transferred $650,000 in trust in 2006: income for life to herself, the remainder to her son. What part, if any, of the value of the trust's assets will be included in Melissa's estate?

The FMV of an asset for gift or estate tax purposes is the same except for

An executor may elect to postpone payment of the estate tax attributable to a remainder or reversionary interest until 6 months after the interests of the other person(s) terminate.

A stock redemption to pay death taxes under Sec. 303 is generally treated as

The payment date for estate taxes may be extended by the IRS for all of the following reasons except

Sasha gives $1,000,000 to her granddaughter. Sasha has used all of her unified credit and is in the 40% marginal gift tax bracket; ignore the annual exclusion and exemption. What is the amount of her tax on this transfer?

Identify which of the following statements is true.

Identify which of the following statements is true.

Ray died on March 4. His estate includes some stock and a parcel of land. The stock is still owned by the estate on September 4, but the land is sold on August 30. If Ray's executor elects the alternate valuation date, what values would be used for estate tax purposes for the stock and the land?

Taxpayers can avoid the estate tax by making gifts at least a year prior to death.

The estate tax return is due, ignoring extensions, 3-1/2 months after the decedent's date of death.

One of the major problems facing executors in managing the estate is

Identify which of the following statements is false.

In 2018, the basic exclusion amount for an estate tax return is $10,000,000 before taking into account necessary inflation adjustments.

Identify which of the following statements is false.

For 2014, the unified credit is equivalent to a statutory exemption of

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Exam 13: The Estate Tax

Explain why living trusts are popular tax-planning vehicles.

Melissa transferred $650,000 in trust in 2006: income for life to herself, the remainder to her son. What part, if any, of the value of the trust's assets will be included in Melissa's estate?

The FMV of an asset for gift or estate tax purposes is the same except for

An executor may elect to postpone payment of the estate tax attributable to a remainder or reversionary interest until 6 months after the interests of the other person(s) terminate.

A stock redemption to pay death taxes under Sec. 303 is generally treated as

The payment date for estate taxes may be extended by the IRS for all of the following reasons except

Sasha gives $1,000,000 to her granddaughter. Sasha has used all of her unified credit and is in the 40% marginal gift tax bracket; ignore the annual exclusion and exemption. What is the amount of her tax on this transfer?

Identify which of the following statements is true.

Identify which of the following statements is true.

Ray died on March 4. His estate includes some stock and a parcel of land. The stock is still owned by the estate on September 4, but the land is sold on August 30. If Ray's executor elects the alternate valuation date, what values would be used for estate tax purposes for the stock and the land?

Taxpayers can avoid the estate tax by making gifts at least a year prior to death.

The estate tax return is due, ignoring extensions, 3-1/2 months after the decedent's date of death.

One of the major problems facing executors in managing the estate is

Identify which of the following statements is false.

In 2018, the basic exclusion amount for an estate tax return is $10,000,000 before taking into account necessary inflation adjustments.

Identify which of the following statements is false.

For 2014, the unified credit is equivalent to a statutory exemption of

Tax Research

Corporate Formations and Capital Structure

The Corporate Income Tax

Corporate Nonliquidating Distributions

Other Corporate Tax Levies

Corporate Liquidating Distributions

Corporate Acquisitions and Reorganizations

Consolidated Tax Returns

Partnership Formation and Operation

Special Partnership Issues

S Corporations

The Gift Tax

Income Taxation of Trusts and Estates

Administrative Procedures

Us Taxation of Foreign-Related Transactions

Filters