Question 1

Identify which of the following statements is true.

Accepted Answer

A) The tax base for the federal estate tax is the total of the decedent's taxable estate and post-1976 taxable gifts. 
B) Property included in a decedent's gross estate consists of only that property to which the decedent held title. 
C) Funeral expenses are not deductible from the gross estate. 
D) All of the above are false. 
A) The tax base for the federal estate tax is the total of the decedent's taxable estate and post-1976 taxable gifts. 
B) Property included in a decedent's gross estate consists of only that property to which the decedent held title. 
C) Funeral expenses are not deductible from the gross estate. 
D) All of the above are false.

Question 2

Identify which of the following statements is true.

Accepted Answer

A) Reversionary interests of less than 5% are includible in the gross estate. 
B) A reversionary interest means a chance exists that the property may pass back to the transferor under the terms of the transfer. 
C) If a reversionary interest exceeds 3% of the property's value,the amount that is included in the estate is not the value of the reversionary interest,but rather the date-of-death value of the gifted property less the value of intervening life estates. 
D) All of the above are false. 
A) Reversionary interests of less than 5% are includible in the gross estate. 
B) A reversionary interest means a chance exists that the property may pass back to the transferor under the terms of the transfer. 
C) If a reversionary interest exceeds 3% of the property's value,the amount that is included in the estate is not the value of the reversionary interest,but rather the date-of-death value of the gifted property less the value of intervening life estates. 
D) All of the above are false.

Question 3

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.

Question 4

A qualified disclaimer is a valuable estate planning tool because

Accepted Answer

A) it establishes the value of the disclaimed assets. 
B) it qualifies the assets for the alternative valuation date. 
C) it is not treated as a gift made by the person who disclaims. 
D) it allows the person making the disclaimer to determine the recipient. 
A) it establishes the value of the disclaimed assets. 
B) it qualifies the assets for the alternative valuation date. 
C) it is not treated as a gift made by the person who disclaims. 
D) it allows the person making the disclaimer to determine the recipient.

Question 5

Identify which of the following statements is true.

Accepted Answer

A) If a marital deduction is elected on a QTIP trust transfer,property remaining in the QTIP trust is not included in the estate of the surviving spouse. 
B) The credit for state death taxes has been replaced with a deduction for state estate taxes. 
C) The unified credit is the only credit allowed against the estate tax. 
D) All of the above are false. 
A) If a marital deduction is elected on a QTIP trust transfer,property remaining in the QTIP trust is not included in the estate of the surviving spouse. 
B) The credit for state death taxes has been replaced with a deduction for state estate taxes. 
C) The unified credit is the only credit allowed against the estate tax. 
D) All of the above are false.

Question 6

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 7

In 2001,Polly and Fred,brother and sister,purchased a condominium at a golf resort.Polly contributed 60% of the $200,000 cost; Fred contributed 40%.Polly dies in the current year when the condominium has a $300,000 value.How much is included in Polly's estate?

Accepted Answer

A) $120,000 
B) $180,000 
C) $200,000 
D) $300,000 
A) $120,000 
B) $180,000 
C) $200,000 
D) $300,000

Question 8

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 9

Brent,who died on January 10,owned 10 shares of Potts Corporation stock.The closest trading dates to January 10 are January 8 (two working days before the date of death)and January 11 (one working day after the date of death).On January 8,the stock traded at a high of 101 and a low of 97,while on January 11,the high was 90 and the low was 86.The date-of-death per-share value is

Accepted Answer

A) $99.00. 
B) $95.33. 
C) $93.50. 
D) $91.67. 
A) $99.00. 
B) $95.33. 
C) $93.50. 
D) $91.67.

Question 10

Ted died on May 3.At the time of his death,he owned a beach house valued at $250,000.On June 10,the beach house was completely destroyed by a hurricane and there was no insurance coverage.If the executor elects to use the alternate valuation date,the executor will

Accepted Answer

A) include the beach house in the gross estate at $250,000. 
B) take a casualty loss of $250,000 on the estate tax return. 
C) take a casualty loss of $250,000 on the estate's income tax return. 
D) include the beach house in the gross estate at $0. 
A) include the beach house in the gross estate at $250,000. 
B) take a casualty loss of $250,000 on the estate tax return. 
C) take a casualty loss of $250,000 on the estate's income tax return. 
D) include the beach house in the gross estate at $0.

Question 11

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 12

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 13

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 14

Identify which of the following statements is true.

Accepted Answer

A) The alternate valuation date can be used for estate tax purposes only if the election increases the value of the gross estate. 
B) If the alternative valuation date is elected,changes in value that occur solely because of "mere lapse of time" usually are to be ignored. 
C) The gross estate,a federal law concept,is generally smaller than the probate estate,a state law concept. 
D) All of the above are false. 
A) The alternate valuation date can be used for estate tax purposes only if the election increases the value of the gross estate. 
B) If the alternative valuation date is elected,changes in value that occur solely because of "mere lapse of time" usually are to be ignored. 
C) The gross estate,a federal law concept,is generally smaller than the probate estate,a state law concept. 
D) All of the above are false.

Question 15

Appraisal methods used to value real estate for estate tax purposes may include

Accepted Answer

A) comparable sales. 
B) reproduction cost. 
C) capitalization of earnings. 
D) all of the above 
A) comparable sales. 
B) reproduction cost. 
C) capitalization of earnings. 
D) all of the above

Question 16

Reversionary interests in publicly traded stocks included in a gross estate must be valued

Accepted Answer

A) by an independent actuary. 
B) by an appraiser. 
C) by considering the fact that the transferor has died. 
D) using actuarial tables. 
A) by an independent actuary. 
B) by an appraiser. 
C) by considering the fact that the transferor has died. 
D) using actuarial tables.

Question 17

Identify which of the following statements is false.

Accepted Answer

A) The "blockage" regulations allow the IRS to prevent the estate's executor from electing the alternate valuation date. 
B) If the alternate valuation date is elected,changes in value that occur solely because of a "mere lapse of time" usually are to be ignored. 
C) The alternate valuation date can be elected for estate tax purposes only if the election decreases the value of the gross estate and estate tax liability (after reduction for credits). 
D) If property is sold within 6 months of the date of death,the alternative valuation date is the date of sale. 
A) The "blockage" regulations allow the IRS to prevent the estate's executor from electing the alternate valuation date. 
B) If the alternate valuation date is elected,changes in value that occur solely because of a "mere lapse of time" usually are to be ignored. 
C) The alternate valuation date can be elected for estate tax purposes only if the election decreases the value of the gross estate and estate tax liability (after reduction for credits). 
D) If property is sold within 6 months of the date of death,the alternative valuation date is the date of sale.

Question 18

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 19

Identify which of the following statements is true.

Accepted Answer

A) In general,an estate tax return is not required to be filed unless the value of the gross estate and adjusted taxable gifts exceeds the exemption equivalent. 
B) Estate taxes must be paid when the return is filed,including any extensions. 
C) The estate tax return is due,ignoring extensions,12 months after the decedent's date of death. 
D) All of the above are false. 
A) In general,an estate tax return is not required to be filed unless the value of the gross estate and adjusted taxable gifts exceeds the exemption equivalent. 
B) Estate taxes must be paid when the return is filed,including any extensions. 
C) The estate tax return is due,ignoring extensions,12 months after the decedent's date of death. 
D) All of the above are false.

Question 20

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.

Exam 13: The Estate Tax

Identify which of the following statements is true.

Identify which of the following statements is true.

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

A qualified disclaimer is a valuable estate planning tool because

Identify which of the following statements is true.

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.

In 2001,Polly and Fred,brother and sister,purchased a condominium at a golf resort.Polly contributed 60% of the $200,000 cost; Fred contributed 40%.Polly dies in the current year when the condominium has a $300,000 value.How much is included in Polly's estate?

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

Ted died on May 3.At the time of his death,he owned a beach house valued at $250,000.On June 10,the beach house was completely destroyed by a hurricane and there was no insurance coverage.If the executor elects to use the alternate valuation date,the executor will

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

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

Identify which of the following statements is true.

Appraisal methods used to value real estate for estate tax purposes may include

Reversionary interests in publicly traded stocks included in a gross estate must be valued

Identify which of the following statements is false.

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

Identify which of the following statements is true.

Identify which of the following statements is false.

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