Question 1

A terminable interest is one that ceases upon the passage of time or the occurrence of some event.

Accepted Answer

A) True 
 B)False

Question 2

On March 1, Sue transfers stock worth $20,000 to Frank. How long must Sue live to avoid inclusion of the $20,000 of stock in her gross estate?

Accepted Answer

A)  three years 
B)  six months 
C)  one year 
D)  No minimum time period exists, but she must be alive at transfer of ownership. 
A)  three years 
B)  six months 
C)  one year 
D)  No minimum time period exists, but she must be alive at transfer of ownership.

Question 3

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

Accepted Answer

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

Question 4

Donna died on June 1 of the current year. The executor considers the following information when preparing her tax return:
• In 1997, Donna transfers title to her personal residence to her son. The residence is worth $60,000 on the tran date. Donna continued to live alone in the residence until her death. She did not pay any rent. At her death, the r is worth $100,000.
• In 1998, Donna created an irrevocable trust and funded it with $300,000 of assets. Donna names a bank as trustee. According to the trust agreement, all the trust income is to be paid out annually for 25 years. The trustee, however, is to decide how much income to pay each year to Donna's son and daughter. Upon termination of the trust, the assets are to be distributed equally among her two children or their estates. The trust's assets are worth $320,000 when Donna dies.
• In 1998, Donna created a revocable trust with a bank named as trustee. She named her grandchild Joe as the beneficiary for life. Upon Joe's death, the property is to be distributed equally among Joe's descendants. The trus are worth $300,000 when Donna dies. How much would be included in Donna's gross estate?

Accepted Answer

$100,000 (residence)

Question 5

Identify which of the following statements is false.

Accepted Answer

A)  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. 
B)  The "blockage" regulations allow the IRS to prevent the estate's executor from electing the alternate valuation date. 
C)  If property is sold within 6 months of the date of death, the alternative valuation date is the date of sale. 
D)  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). 
A)  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. 
B)  The "blockage" regulations allow the IRS to prevent the estate's executor from electing the alternate valuation date. 
C)  If property is sold within 6 months of the date of death, the alternative valuation date is the date of sale. 
D)  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).

Question 6

Julian died on November 1 and owned 100 shares of a New York Stock Exchange stock. The stock traded at a high of 100 and a low of 98 on November 1. It opened at 98 and closed at 100. On Julian's estate tax return, what will the per- share and total value of the stock be?

Accepted Answer

($100 + 98)/2 = $99

Question 7

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 8

Identify which of the following statements is false.

Accepted Answer

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

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

Question 10

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 11

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

Accepted Answer

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

Question 12

In 1997, Barry and Fred provide $20,000 and $60,000 of consideration, respectively, to purchase a beach house titled in both their names as joint tenants with right of survivorship. Barry dies in the current year and is survived by Fred. The beach house is valued at $100,000. What amount must be included in Barry's gross estate for the beach house?

Accepted Answer

^$20,000× $100,000

Question 13

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

Accepted Answer

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

Question 14

The maximum amount of the stock redemption proceeds under Sec. 303 is determined by summing all of the following except

Accepted Answer

A)  the estate's death taxes. 
B)  the estate's administrative expenses. 
C)  the estate's funeral expenses. 
D)  All are allowable. 
A)  the estate's death taxes. 
B)  the estate's administrative expenses. 
C)  the estate's funeral expenses. 
D)  All are allowable.

Question 15

Karen died on May 5 of the current year. Her executor elects date- of- death valuation. Karen's gross estate possib includes the following items:
• Joint checking account (with her husband), which has a balance of $10,000. Her husband did not contribute t account.
• Joint savings account (with her daughter), which has a balance of $50,000. Her daughter did not contribute t account.
• Life insurance policy on the life of Karen, having a face value of $400,000. The cost of a comparable policy immediately before Karen's death is $150,000. Karen's estate is the beneficiary.
• Life insurance policy on the life of Karen's daughter, having a face value of $100,000 with an interpolated ter reserve immediately before Karen's death of $30,000.
Unexpired premiums are $5,000. Karen is the beneficiary. How much, if any, of these items are included in Kare estate?

Accepted Answer

$490,000 = $5,000 (one- half of joint ch

Question 16

On March 1, Bart transfers ownership of a $700,000 life insurance policy on his life that he purchased in 2015. How long must Bart live to avoid inclusion of the $700,000 death benefit in his estate?

Accepted Answer

A)  six months 
B)  three years 
C)  one year 
D)  No minimum time period exists. 
A)  six months 
B)  three years 
C)  one year 
D)  No minimum time period exists.

Question 17

The estate tax is a wealth transfer tax.

Accepted Answer

A) True 
 B)False

Question 18

Identify which of the following statements is true.

Accepted Answer

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

Question 19

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 20

Joe dies late in 2015 and his estate is subject to an estate tax of $2 million. He leaves all of his assets to his daughter, Claudia. Claudia dies in early 2017. Which of the following statements is correct?

Accepted Answer

A)  Claudia's estate receives a credit for $1,000,000 of Joe's estate tax. 
B)  Claudia's estate receives a credit for $2,000,000 of Joe's estate tax. 
C)  Claudia's estate receives no credit or deduction for the tax paid by Joe's estate. 
D)  Claudia's estate receives a deduction for $2,000,000 of Joe's estate tax. 
A)  Claudia's estate receives a credit for $1,000,000 of Joe's estate tax. 
B)  Claudia's estate receives a credit for $2,000,000 of Joe's estate tax. 
C)  Claudia's estate receives no credit or deduction for the tax paid by Joe's estate. 
D)  Claudia's estate receives a deduction for $2,000,000 of Joe's estate tax.

A terminable interest is one that ceases upon the passage of time or the occurrence of some event.

On March 1, Sue transfers stock worth $20,000 to Frank. How long must Sue live to avoid inclusion of the $20,000 of stock in her gross estate?

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

Identify which of the following statements is false.

Julian died on November 1 and owned 100 shares of a New York Stock Exchange stock. The stock traded at a high of 100 and a low of 98 on November 1. It opened at 98 and closed at 100. On Julian's estate tax return, what will the per- share and total value of the stock be?

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

Identify which of the following statements is false.

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

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?

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

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

The maximum amount of the stock redemption proceeds under Sec. 303 is determined by summing all of the following except

On March 1, Bart transfers ownership of a $700,000 life insurance policy on his life that he purchased in 2015. How long must Bart live to avoid inclusion of the $700,000 death benefit in his estate?

The estate tax is a wealth transfer tax.

Identify which of the following statements is true.

Joe dies late in 2015 and his estate is subject to an estate tax of $2 million. He leaves all of his assets to his daughter, Claudia. Claudia dies in early 2017. Which of the following statements is correct?

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

Tax Deductions and Travel Expenses for Employees and Self-Employed Individuals

Filters

Exam 13: The Estate Tax

A terminable interest is one that ceases upon the passage of time or the occurrence of some event.

On March 1, Sue transfers stock worth $20,000 to Frank. How long must Sue live to avoid inclusion of the $20,000 of stock in her gross estate?

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

Identify which of the following statements is false.

Julian died on November 1 and owned 100 shares of a New York Stock Exchange stock. The stock traded at a high of 100 and a low of 98 on November 1. It opened at 98 and closed at 100. On Julian's estate tax return, what will the per- share and total value of the stock be?

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

Identify which of the following statements is false.

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

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?

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

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

The maximum amount of the stock redemption proceeds under Sec. 303 is determined by summing all of the following except

On March 1, Bart transfers ownership of a $700,000 life insurance policy on his life that he purchased in 2015. How long must Bart live to avoid inclusion of the $700,000 death benefit in his estate?

The estate tax is a wealth transfer tax.

Identify which of the following statements is true.

Joe dies late in 2015 and his estate is subject to an estate tax of $2 million. He leaves all of his assets to his daughter, Claudia. Claudia dies in early 2017. Which of the following statements is correct?

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

Tax Deductions and Travel Expenses for Employees and Self-Employed Individuals

Filters