Question 1

The probate estate includes property that passes by will or an intestacy statute and does not include property that passes due to a beneficiary designation.

Accepted Answer

A) True 
 B)False

Question 2

The alternate valuation date is generally

Accepted Answer

A)  3 months after the date of death. 
B)  6 months after the date of death. 
C)  9 months after the date of death. 
D)  12 months after the date of death. 
A)  3 months after the date of death. 
B)  6 months after the date of death. 
C)  9 months after the date of death. 
D)  12 months after the date of death.

Question 3

Mary Johnson dies early in the current year. All her property passes subject to her will, which states that all of her property is to go to a QTIP trust for Dan for life with the remainder to their children. Mary's gross estate is about $11 million, and her Sec. 2053 deductions are very small. Dan, who is in poor health, already owns about $6 million of property. What tax issues should Dan Johnson and the estate's executor consider with respect to the property that passes to the QTIP trust?

Accepted Answer

• The issue is what marital deduction (i

Question 4

Denise died April 1 and owned several bonds that paid interest March 31 and September 30. Also, she owned stock that paid dividends quarterly on March 31, June 30, September 30, and December 31. Denise's estate received the interest and dividends on the payment dates. What should be included in Denise's gross estate?

Accepted Answer

A)  all interest and dividends received in the year of death 
B)  only interest and dividends received prior to the date of death 
C)  only interest and dividends received after the date of death 
D)  none of the interest and dividends received 
A)  all interest and dividends received in the year of death 
B)  only interest and dividends received prior to the date of death 
C)  only interest and dividends received after the date of death 
D)  none of the interest and dividends received

Question 5

Mr. Howell died this year. He willed a copyright with a 10-year remaining life to Mrs. Howell. His will also sets up a trust for the benefit of Mrs. Howell whom he entitles to receive all of the income semiannually until the earlier of her remarriage or her death. Upon her remarriage or death, the trust property is to be distributed to their children. Do the copyright and trust transfers qualify for the marital deduction? Explain.

Accepted Answer

The copyright is a terminable interest;

Question 6

Dan transfers an apartment building to Grace but retains the right to the rental income for 10 years. Dan dies nine years after the transfer when the building is worth $600,000. The applicable federal rate is 10% and the reversionary actuarial factor is 0.30. How much would be included in Dan's estate?

Accepted Answer

A)  $0 
B)  $150,000 
C)  $350,000 
D)  $600,000 
A)  $0 
B)  $150,000 
C)  $350,000 
D)  $600,000

Question 7

Identify which of the following statements is true.

Accepted Answer

A)  The period for payment of estate taxes may be extended if the executor shows "reasonable cause" for not being able to pay some, or all, of the estate tax liability on the regular due date. 
B)  The estate tax on interests in certain closely held businesses may be paid in installments over a 15-year period if elected. 
C)  An executor may elect to postpone payment of the estate tax attributable to a remainder or reversionary interest until eight months after the interests of the other person(s) terminate. 
D)  All of the above are false. 
A)  The period for payment of estate taxes may be extended if the executor shows "reasonable cause" for not being able to pay some, or all, of the estate tax liability on the regular due date. 
B)  The estate tax on interests in certain closely held businesses may be paid in installments over a 15-year period if elected. 
C)  An executor may elect to postpone payment of the estate tax attributable to a remainder or reversionary interest until eight months after the interests of the other person(s) terminate. 
D)  All of the above are false.

Question 8

The following items were discovered in reviewing materials for John's estate tax return:
(1) Two years ago, John sold stock to his son, Patrick, for $30,000. At the date of sale, the stock had a value of $65,000. The value of the stocks at John's death was $90,000.
(2) John owned a beach house, worth $500,000, with his sister, Amber, who paid for it.
(3) John's home was held in a tenancy by the entirety with his wife, Julia. Julia paid for the house, which had a value of $300,000 on the date of his death.
(4) John's clothing and other personal belongings are worth $3,700 on the date of his death.
What amount is included in John's estate?

Accepted Answer

Home $150,000
Clothing and per

Question 9

Proceeds of a life insurance policy payable to the estate's executor, as the estate's representative, are

Accepted Answer

A)  includible in the decedent's gross estate only if the premiums had been paid by the insured. 
B)  includible in the decedent's gross estate only if the policy was taken out within three years of the insured's death. 
C)  never includible in the decedent's gross estate. 
D)  always includible in the decedent's gross estate. 
A)  includible in the decedent's gross estate only if the premiums had been paid by the insured. 
B)  includible in the decedent's gross estate only if the policy was taken out within three years of the insured's death. 
C)  never includible in the decedent's gross estate. 
D)  always includible in the decedent's gross estate.

Question 10

Mary creates and funds a revocable trust. Mary names her son to receive the income for life and her grandson to receive the property upon the son's death. What are Mary's powers with respect to the trust, and how will the trust be treated in her estate?

Accepted Answer

Since the trust is revocable,

Question 11

The GSTT's (generation-skipping transfer tax) purpose is

Accepted Answer

A)  to impose a graduated transfer tax one time a generation. 
B)  to impose some form of transfer tax one time a generation. 
C)  to impose a graduated transfer tax every other generation. 
D)  to impose some form of transfer tax every other generation. 
A)  to impose a graduated transfer tax one time a generation. 
B)  to impose some form of transfer tax one time a generation. 
C)  to impose a graduated transfer tax every other generation. 
D)  to impose some form of transfer tax every other generation.

Question 12

Identify which of the following statements is false.

Accepted Answer

A)  Life insurance can help provide liquidity for paying estate taxes. 
B)  Life insurance has the potential for large appreciation. 
C)  The insured does not have to be the owner of the policy. 
D)  Life insurance is always part of the estate of the insured. 
A)  Life insurance can help provide liquidity for paying estate taxes. 
B)  Life insurance has the potential for large appreciation. 
C)  The insured does not have to be the owner of the policy. 
D)  Life insurance is always part of the estate of the insured.

Question 13

Praneh Patel, a widower, died in March of the current year. His gross estate is $11,000,000, and at the time of his death, he owed debts of $40,000. His will made a charitable bequest of $280,000 and left the rest of his property to his children. His administrative expenses are estimated to be about $55,000. What tax issues should the estate's CPA consider when preparing Praneh's estate tax return and his estate's income tax return?

Accepted Answer

• What deductions will Praneh's estate r

Question 14

Which of the following is not a test for an interest to qualify for the marital deduction?

Accepted Answer

A)  The property must be included in the decedent's gross estate. 
B)  If a QTIP transfer is made, the spouse must be entitled to all of the income at least annually for life. 
C)  The interest conveyed must not be a nondeductible terminable interest. 
D)  All of the above are required. 
A)  The property must be included in the decedent's gross estate. 
B)  If a QTIP transfer is made, the spouse must be entitled to all of the income at least annually for life. 
C)  The interest conveyed must not be a nondeductible terminable interest. 
D)  All of the above are required.

Question 15

A special power of appointment exists if the holder can exercise the power in favor of himself or herself, his or her creditors, or the creditors of his or her estate.

Accepted Answer

A) True 
 B)False

Question 16

Ernie died this year. His will creates a $2,000,000 QTIP trust for his widow. Ernie's executor elects to claim the marital deduction for the QTIP transfer. At the time of the surviving spouse's death, the value of the QTIP trust is $3.6 million. The amount of the QTIP trust included in the surviving spouse's gross estate is

Accepted Answer

A)  $3,600,000. 
B)  $2,000,000. 
C)  $1,800,000. 
D)  $0. 
A)  $3,600,000. 
B)  $2,000,000. 
C)  $1,800,000. 
D)  $0.

Question 17

In 2000, Mike transfers $100,000 of leased land to a trust. The trust income is payable to Mike's son for 13 years, after which time the land is to revert to Mike. This year, Mike dies when the land is valued at $210,000. The applicable federal rate is 10%, and the reversionary actuarial factor is 0.30. How much of the trust value must be included in Mike's estate?

Accepted Answer

0.30 × $21

Question 18

The gross-up rule requires

Accepted Answer

A)  all beneficial interests be included in the decedent's estate. 
B)  post-1976 gifts by the decedent be included in the decedent's estate. 
C)  certain gifts made by the decedent within three years of the date of death are included in the decedent's gross estate. 
D)  gift taxes on gifts made by the decedent or the decedent's spouse that are paid by the decedent or his estate during the three-year period ending with the decedent's date of death must be included in the decedent's gross estate. 
A)  all beneficial interests be included in the decedent's estate. 
B)  post-1976 gifts by the decedent be included in the decedent's estate. 
C)  certain gifts made by the decedent within three years of the date of death are included in the decedent's gross estate. 
D)  gift taxes on gifts made by the decedent or the decedent's spouse that are paid by the decedent or his estate during the three-year period ending with the decedent's date of death must be included in the decedent's gross estate.

Question 19

In 2001, Alejandro buys an annuity for $100,000 that will pay Alejandro an annual amount for life with survivor benefits to his wife. When Alejandro dies in the current year, a comparable contract would have cost $81,000. What amount is included in Alejandro's gross estate?

Accepted Answer

A)  $0 
B)  $81,000 
C)  $100,000 
D)  $181,000 
A)  $0 
B)  $81,000 
C)  $100,000 
D)  $181,000

Question 20

In 2002, Gert made a $5,000,000 taxable gift. The 2002 gift tax on $5,000,000 was $2,275.800. Gert was entitled to a unified credit of $345,800, resulting in a gift tax of $1,193,000. The marginal tax rate in 2002 is 50%. Assume Gert dies in 2013 when the credit is $2,045.800 and the marginal rate is 40%, the tax on $5,000,000 would equal $1,945,800 before subtracting any credit. In arriving at Gert's estate tax liability, what is the amount subtracted for 1992 gift taxes paid?

Accepted Answer

$1,600,000 = $1,945,800 ($5,00

The probate estate includes property that passes by will or an intestacy statute and does not include property that passes due to a beneficiary designation.

The alternate valuation date is generally

Identify which of the following statements is true.

Proceeds of a life insurance policy payable to the estate's executor, as the estate's representative, are

Mary creates and funds a revocable trust. Mary names her son to receive the income for life and her grandson to receive the property upon the son's death. What are Mary's powers with respect to the trust, and how will the trust be treated in her estate?

The GSTT's (generation-skipping transfer tax) purpose is

Identify which of the following statements is false.

Which of the following is not a test for an interest to qualify for the marital deduction?

A special power of appointment exists if the holder can exercise the power in favor of himself or herself, his or her creditors, or the creditors of his or her estate.

The gross-up rule requires

In 2001, Alejandro buys an annuity for $100,000 that will pay Alejandro an annual amount for life with survivor benefits to his wife. When Alejandro dies in the current year, a comparable contract would have cost $81,000. What amount is included in Alejandro's gross estate?

Tax Research

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The Corporate Income Tax

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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

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Exam 13: The Estate Tax

The probate estate includes property that passes by will or an intestacy statute and does not include property that passes due to a beneficiary designation.

The alternate valuation date is generally

Identify which of the following statements is true.

Proceeds of a life insurance policy payable to the estate's executor, as the estate's representative, are

Mary creates and funds a revocable trust. Mary names her son to receive the income for life and her grandson to receive the property upon the son's death. What are Mary's powers with respect to the trust, and how will the trust be treated in her estate?

The GSTT's (generation-skipping transfer tax) purpose is

Identify which of the following statements is false.

Which of the following is not a test for an interest to qualify for the marital deduction?

A special power of appointment exists if the holder can exercise the power in favor of himself or herself, his or her creditors, or the creditors of his or her estate.

The gross-up rule requires

In 2001, Alejandro buys an annuity for $100,000 that will pay Alejandro an annual amount for life with survivor benefits to his wife. When Alejandro dies in the current year, a comparable contract would have cost $81,000. What amount is included in Alejandro's gross estate?

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