Question 1

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 2

The tax base for the federal estate tax is the total of the decedent's taxable estate and post-1986 taxable gifts if the decedent made gifts in 1981.

Accepted Answer

A) True 
 B)False

Question 3

Listed stocks are valued at their closing price on the date of death.

Accepted Answer

A) True 
 B)False

Question 4

Following are the fair market values of Wilma's assets at her date of death: $\begin{array}{|l|l|}
\hline \text { Personal effects and jewelry }&\$150,000\
\hline \begin{array}{ll}
\text { Land which Wilma bought and held as a joint }\\text {tenant with right of survivorship with her sister }\
\end{array}&800,000\
\hline 
\end{array}$
 The executor of Wilma's estate did not elect the alternate valuation date.The amount includible in Wilma's gross estate is

Accepted Answer

A) $150,000. 
B) $550,000. 
C) $800,000. 
D) $950,000. 
A) $150,000. 
B) $550,000. 
C) $800,000. 
D) $950,000.

Question 5

Which of the following circumstances would cause the gifted property to be included in the donor's gross estate? I.Donor retains a life estate in the gift property.
II)Donor retains the power to revoke or amend the gift.
III)Donor gives more than $14,000 to one donee in one year.
IV)Donor dies within three years of gifting land.

Accepted Answer

A) I,II and III 
B) I,II 
C) II,IV 
D) III,IV 
A) I,II and III 
B) I,II 
C) II,IV 
D) III,IV

Question 6

Identify which of the following statements is false.

Accepted Answer

A) Every grantor is entitled to a $5.25 million exemption from the GSTT in 2011. 
B) If Greg transfers assets directly to his grandson,this transaction would be an example of a direct skip. 
C) If Shaad transfers property in trust to his son,with the remainder to his grandson,at the death of the son a taxable termination will result. 
D) The GSTT is levied at a flat rate,which is higher than the top rate under the estate tax rate schedule. 
A) Every grantor is entitled to a $5.25 million exemption from the GSTT in 2011. 
B) If Greg transfers assets directly to his grandson,this transaction would be an example of a direct skip. 
C) If Shaad transfers property in trust to his son,with the remainder to his grandson,at the death of the son a taxable termination will result. 
D) The GSTT is levied at a flat rate,which is higher than the top rate under the estate tax rate schedule.

Question 7

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 8

Four years ago,Roper transferred to his son ownership of a $100,000 life insurance policy that Roper purchased on his own life in 2000.The cash value of the policy on the transfer date was $25,000.Roper died on March 1st of this year.The amount included in Roper's gross estate due to the life insurance policy is

Accepted Answer

A) $0. 
B) $25,000. 
C) $35,000. 
D) $100,000. 
A) $0. 
B) $25,000. 
C) $35,000. 
D) $100,000.

Question 9

Administrative expenses are not deductible on the estate's income tax return.

Accepted Answer

A) True 
 B)False

Question 10

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 11

An executor can value each asset in an estate at the lower of its FMV at death or the alternate valuation date.

Accepted Answer

A) True 
 B)False

Question 12

Martin transfers stock to an irrevocable trust and names himself to receive the trust income for life with the remainder interest gifted to his son.When Martin dies

Accepted Answer

A) none of the stock will be included in Martin's estate. 
B) the stock's value at the time of transfer to the trust will be included in Martin's estate. 
C) the value of the stock less the present value of the income receivable by Martin will be included in Martin's estate. 
D) the value of the stock at death will be included in Martin's estate. 
A) none of the stock will be included in Martin's estate. 
B) the stock's value at the time of transfer to the trust will be included in Martin's estate. 
C) the value of the stock less the present value of the income receivable by Martin will be included in Martin's estate. 
D) the value of the stock at death will be included in Martin's estate.

Question 13

Which of the following is not a credit for purposes of computing the federal estate tax liability?

Accepted Answer

A) credit for gift tax paid on pre-1977 gifts 
B) credit for estate taxes paid on certain prior transfers 
C) a credit for foreign death taxes 
D) All of the above are credits for the federal estate tax. 
A) credit for gift tax paid on pre-1977 gifts 
B) credit for estate taxes paid on certain prior transfers 
C) a credit for foreign death taxes 
D) All of the above are credits for the federal estate tax.

Question 14

The estate tax is a wealth transfer tax.

Accepted Answer

A) True 
 B)False

Question 15

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 16

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 17

Identify which of the following statements is true.

Accepted Answer

A) The gross-up rule applies to the gift tax triggered by a gift during a three-year look-forward period. 
B) All gift taxes paid by the decedent on gifts made within five years of the date of death must be included in the gross estate. 
C) If a transferor retains voting rights in stock of a controlled corporation for the transferor's lifetime,the stock is included in the transferor's gross estate. 
D) All of the above are false. 
A) The gross-up rule applies to the gift tax triggered by a gift during a three-year look-forward period. 
B) All gift taxes paid by the decedent on gifts made within five years of the date of death must be included in the gross estate. 
C) If a transferor retains voting rights in stock of a controlled corporation for the transferor's lifetime,the stock is included in the transferor's gross estate. 
D) All of the above are false.

Exam 13: The Estate Tax

Identify which of the following statements is true.

The tax base for the federal estate tax is the total of the decedent's taxable estate and post-1986 taxable gifts if the decedent made gifts in 1981.

Listed stocks are valued at their closing price on the date of death.

Identify which of the following statements is false.

Administrative expenses are not deductible on the estate's income tax return.

Identify which of the following statements is false.

An executor can value each asset in an estate at the lower of its FMV at death or the alternate valuation date.

Martin transfers stock to an irrevocable trust and names himself to receive the trust income for life with the remainder interest gifted to his son.When Martin dies

Which of the following is not a credit for purposes of computing the federal estate tax liability?

The estate tax is a wealth transfer tax.

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

Identify which of the following statements is true.

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