Question 1

One of the objectives of family tax planning is to minimize income taxes on transfers of property within the family unit.

Accepted Answer

A) True 
 B)False

Question 2

Which, if any, are characteristics of the valuation tables issued by the IRS?

Accepted Answer

A)  The IRS must issue new updated tables once a year. 
B)  To determine the factor for a remainder interest, subtract the life estate factor provided in the table from one. 
C)  The same table that provides the factor for a life estate can be used to determine the value of an income interest for a term certain. 
D)  To use the tables, the Federal mid-term interest rate for the month of the transfer must be known. 
E)  None of the above. 
A)  The IRS must issue new updated tables once a year. 
B)  To determine the factor for a remainder interest, subtract the life estate factor provided in the table from one. 
C)  The same table that provides the factor for a life estate can be used to determine the value of an income interest for a term certain. 
D)  To use the tables, the Federal mid-term interest rate for the month of the transfer must be known. 
E)  None of the above.

Question 3

Passing installment notes by death will not avoid any income tax on the deferred gain.

Accepted Answer

A) True 
 B)False

Question 4

Under Cindy's will, her share of their community property passes to Van, her surviving spouse. Cindy's property is subject to probate.

Accepted Answer

A) True 
 B)False

Question 5

One way to dispute the existence of large goodwill is to argue that the decedent was not a key person in the operation of the business.

Accepted Answer

A) True 
 B)False

Question 6

At the time of his death, Harvey was a shareholder in Grebe Corporation. In valuing the Grebe stock included in Harvey's gross estate, the IRS contends that the corporation possessed considerable goodwill. In disputing this contention, which of the following point(s) is/are relevant?

Accepted Answer

A)  Average net profit figures include large gains from unrelated investments. 
B)  The rate of return used by the IRS for the type of business involved is too high. 
C)  Harvey was not an employee of Grebe but was merely a passive investor. 
D)  To provide financing, Grebe has been obtaining its working capital from banks at a market rate of interest. 
E)  None of the above. 
A)  Average net profit figures include large gains from unrelated investments. 
B)  The rate of return used by the IRS for the type of business involved is too high. 
C)  Harvey was not an employee of Grebe but was merely a passive investor. 
D)  To provide financing, Grebe has been obtaining its working capital from banks at a market rate of interest. 
E)  None of the above.

Question 7

Whether an organization is a qualified charity for estate tax purposes depends on its status on the date the will is executed and not when the transfer takes place.

Accepted Answer

A) True 
 B)False

Question 8

Match each statement with the correct choice. Some choices may be used more than once or not used at all
-Donee's basis for loss.

Accepted Answer

A) Step-up in basis 
B) Step-down in basis 
C) Gift of installment notes receivable 
D) Gift of property that has § 1245 or § 1250 potential for recapture of depreciation 
E) Donor's basis on date of gift (appreciated property given, no gift tax due)
F)The amount of the deceased spouse's taxable estate does not change
G)Fair market value on date of gift
H)Expected surviving spouse is in good health and 10 years younger
I)No income tax consequences to the beneficiary
J)Income in respect of a decedent (IR
D) 
K)No correct choice is given 
A) Step-up in basis 
B) Step-down in basis 
C) Gift of installment notes receivable 
D) Gift of property that has § 1245 or § 1250 potential for recapture of depreciation 
E) Donor's basis on date of gift (appreciated property given, no gift tax due)
F)The amount of the deceased spouse's taxable estate does not change
G)Fair market value on date of gift
H)Expected surviving spouse is in good health and 10 years younger
I)No income tax consequences to the beneficiary
J)Income in respect of a decedent (IR
D) 
K)No correct choice is given

Question 9

Match each statement with the correct choice. Some choices may be used more than once or not used at all
-Transfer by death of depreciable property.

Accepted Answer

A) Revocable trusts 
B) Income in respect of a decedent (IR
D)  
C) Conservation easement 
D) Discretionary extension of time to pay estate tax (§ 6161) 
E) Estate freeze-corporations
F)Extension of time involving interest in closely held business (§ 6166)
G)Special use valuation as to certain realty (§ 2032
A) 
H)Depreciation recapture potential eliminated
I)Alternate valuation date (§ 2032)
J)Election to split gifts (§ 2513)
K)No correct choice is given 
A) Revocable trusts 
B) Income in respect of a decedent (IR
D)  
C) Conservation easement 
D) Discretionary extension of time to pay estate tax (§ 6161) 
E) Estate freeze-corporations
F)Extension of time involving interest in closely held business (§ 6166)
G)Special use valuation as to certain realty (§ 2032
A) 
H)Depreciation recapture potential eliminated
I)Alternate valuation date (§ 2032)
J)Election to split gifts (§ 2513)
K)No correct choice is given

Question 10

A well-known artist dies and among her assets are a large number of her paintings. What approach might be taken to lower the value of her estate?

Accepted Answer

A blockage discount might be warranted i

Question 11

Match each statement with the correct choice. Some choices may be used more than once or not used at all
-Current use valuation as to certain realty (§ 2032A).

Accepted Answer

A) Use IRS valuation tables 
B) Blockage rule 
C) Special use value 
D) Best or most suitable use value 
E) Cost of going public
F)Replacement cost of a comparable contract
G)Portion of a deceased spouse's share of community property that passes to a surviving spouse
H)Cross-purchase buy and sell agreement
I)Entity buy and sell agreement
J)Bypass amount
K)No correct choice is given 
A) Use IRS valuation tables 
B) Blockage rule 
C) Special use value 
D) Best or most suitable use value 
E) Cost of going public
F)Replacement cost of a comparable contract
G)Portion of a deceased spouse's share of community property that passes to a surviving spouse
H)Cross-purchase buy and sell agreement
I)Entity buy and sell agreement
J)Bypass amount
K)No correct choice is given

Question 12

For the IRS to grant a discretionary extension of time to pay estate taxes (under § 6161), the executor must show that the estate would otherwise undergo undue hardship.

Accepted Answer

A) True 
 B)False

Question 13

How can a disclaimer by an heir increase the charitable deduction allowed a decedent? Is such a disclaimer always wise? Explain.

Accepted Answer

A person can structure a will so that pr

Question 14

Funding an entity type of buy and sell agreement with life insurance requires fewer policies than in the case of the cross-purchase type.

Accepted Answer

A) True 
 B)False

Question 15

A donee's income tax basis in property received as a gift will include any gift tax paid by the donor.

Accepted Answer

A) True 
 B)False

Question 16

Match each statement with the correct choice. Some choices may be used more than once or not used at all
-Surviving spouse disclaims inheritance in favor of bypass amount.

Accepted Answer

A) Step-up in basis 
B) Step-down in basis 
C) Gift of installment notes receivable 
D) Gift of property that has § 1245 or § 1250 potential for recapture of depreciation 
E) Donor's basis on date of gift (appreciated property given, no gift tax due)
F)The amount of the deceased spouse's taxable estate does not change
G)Fair market value on date of gift
H)Expected surviving spouse is in good health and 10 years younger
I)No income tax consequences to the beneficiary
J)Income in respect of a decedent (IR
D) 
K)No correct choice is given 
A) Step-up in basis 
B) Step-down in basis 
C) Gift of installment notes receivable 
D) Gift of property that has § 1245 or § 1250 potential for recapture of depreciation 
E) Donor's basis on date of gift (appreciated property given, no gift tax due)
F)The amount of the deceased spouse's taxable estate does not change
G)Fair market value on date of gift
H)Expected surviving spouse is in good health and 10 years younger
I)No income tax consequences to the beneficiary
J)Income in respect of a decedent (IR
D) 
K)No correct choice is given

Question 17

Herbert leaves one-half of his estate to his wife, Ramona, and the remainder to a qualified charity. Herbert's estate taxes will not be reduced if Ramona disclaims her interest in favor of the charity.

Accepted Answer

A) True 
 B)False

Question 18

The special use valuation method of § 2032A is available for valuing transfers by gift.

Accepted Answer

A) True 
 B)False

Question 19

In a typical "estate freeze" involving stock:

Accepted Answer

A)  The common stock is subject to the gift tax but not to the estate tax. 
B)  The preferred stock is subject to the gift tax but not to the estate tax. 
C)  The owner makes a gift of both common and preferred stock. 
D)  The common stock is subject to both the gift tax and the estate tax. 
E)  None of the above. 
A)  The common stock is subject to the gift tax but not to the estate tax. 
B)  The preferred stock is subject to the gift tax but not to the estate tax. 
C)  The owner makes a gift of both common and preferred stock. 
D)  The common stock is subject to both the gift tax and the estate tax. 
E)  None of the above.

Question 20

Match each statement with the correct choice. Some choices may be used more than once or not used at all
-Living trusts.

Accepted Answer

A) Revocable trusts 
B) Income in respect of a decedent (IR
D)  
C) Conservation easement 
D) Discretionary extension of time to pay estate tax (§ 6161) 
E) Estate freeze-corporations
F)Extension of time involving interest in closely held business (§ 6166)
G)Special use valuation as to certain realty (§ 2032
A) 
H)Depreciation recapture potential eliminated
I)Alternate valuation date (§ 2032)
J)Election to split gifts (§ 2513)
K)No correct choice is given 
A) Revocable trusts 
B) Income in respect of a decedent (IR
D)  
C) Conservation easement 
D) Discretionary extension of time to pay estate tax (§ 6161) 
E) Estate freeze-corporations
F)Extension of time involving interest in closely held business (§ 6166)
G)Special use valuation as to certain realty (§ 2032
A) 
H)Depreciation recapture potential eliminated
I)Alternate valuation date (§ 2032)
J)Election to split gifts (§ 2513)
K)No correct choice is given

One of the objectives of family tax planning is to minimize income taxes on transfers of property within the family unit.

Which, if any, are characteristics of the valuation tables issued by the IRS?

Passing installment notes by death will not avoid any income tax on the deferred gain.

Under Cindy's will, her share of their community property passes to Van, her surviving spouse. Cindy's property is subject to probate.

One way to dispute the existence of large goodwill is to argue that the decedent was not a key person in the operation of the business.

At the time of his death, Harvey was a shareholder in Grebe Corporation. In valuing the Grebe stock included in Harvey's gross estate, the IRS contends that the corporation possessed considerable goodwill. In disputing this contention, which of the following point(s) is/are relevant?

Whether an organization is a qualified charity for estate tax purposes depends on its status on the date the will is executed and not when the transfer takes place.

Match each statement with the correct choice. Some choices may be used more than once or not used at all -Donee's basis for loss.

Match each statement with the correct choice. Some choices may be used more than once or not used at all -Transfer by death of depreciable property.

A well-known artist dies and among her assets are a large number of her paintings. What approach might be taken to lower the value of her estate?

Match each statement with the correct choice. Some choices may be used more than once or not used at all -Current use valuation as to certain realty (§ 2032A).

For the IRS to grant a discretionary extension of time to pay estate taxes (under § 6161), the executor must show that the estate would otherwise undergo undue hardship.

How can a disclaimer by an heir increase the charitable deduction allowed a decedent? Is such a disclaimer always wise? Explain.

Funding an entity type of buy and sell agreement with life insurance requires fewer policies than in the case of the cross-purchase type.

A donee's income tax basis in property received as a gift will include any gift tax paid by the donor.

Match each statement with the correct choice. Some choices may be used more than once or not used at all -Surviving spouse disclaims inheritance in favor of bypass amount.

Herbert leaves one-half of his estate to his wife, Ramona, and the remainder to a qualified charity. Herbert's estate taxes will not be reduced if Ramona disclaims her interest in favor of the charity.

The special use valuation method of § 2032A is available for valuing transfers by gift.

In a typical "estate freeze" involving stock:

Match each statement with the correct choice. Some choices may be used more than once or not used at all -Living trusts.

Understanding and Working With the Federal Tax Law

Corporations: Introduction and Operating Rules

Corporations: Special Situations

Corporations: Organization and Capital Structure

Corporations: Earnings Profits and Dividend Distributions

Corporations: Redemptions and Liquidations

Corporations: Reorganizations

Consolidated Tax Returns

Taxation of International Transactions

Partnerships: Formation, Operation, and Basis

Partnerships: Distributions, Transfer of Interests, and Terminations

S Corporations

Comparative Forms of Doing Business

Taxes on the Financial Statements

Exempt Entities

Multistate Corporate Taxation

Tax Practice and Ethics

The Federal Gift and Estate Taxes

Income Taxation of Trusts and Estates

Filters

Exam 19: Family Tax Planning

One of the objectives of family tax planning is to minimize income taxes on transfers of property within the family unit.

Which, if any, are characteristics of the valuation tables issued by the IRS?

Passing installment notes by death will not avoid any income tax on the deferred gain.

Under Cindy's will, her share of their community property passes to Van, her surviving spouse. Cindy's property is subject to probate.

One way to dispute the existence of large goodwill is to argue that the decedent was not a key person in the operation of the business.

At the time of his death, Harvey was a shareholder in Grebe Corporation. In valuing the Grebe stock included in Harvey's gross estate, the IRS contends that the corporation possessed considerable goodwill. In disputing this contention, which of the following point(s) is/are relevant?

Whether an organization is a qualified charity for estate tax purposes depends on its status on the date the will is executed and not when the transfer takes place.

Match each statement with the correct choice. Some choices may be used more than once or not used at all -Donee's basis for loss.

Match each statement with the correct choice. Some choices may be used more than once or not used at all -Transfer by death of depreciable property.

A well-known artist dies and among her assets are a large number of her paintings. What approach might be taken to lower the value of her estate?

Match each statement with the correct choice. Some choices may be used more than once or not used at all -Current use valuation as to certain realty (§ 2032A).

For the IRS to grant a discretionary extension of time to pay estate taxes (under § 6161), the executor must show that the estate would otherwise undergo undue hardship.

How can a disclaimer by an heir increase the charitable deduction allowed a decedent? Is such a disclaimer always wise? Explain.

Funding an entity type of buy and sell agreement with life insurance requires fewer policies than in the case of the cross-purchase type.

A donee's income tax basis in property received as a gift will include any gift tax paid by the donor.

Match each statement with the correct choice. Some choices may be used more than once or not used at all -Surviving spouse disclaims inheritance in favor of bypass amount.

Herbert leaves one-half of his estate to his wife, Ramona, and the remainder to a qualified charity. Herbert's estate taxes will not be reduced if Ramona disclaims her interest in favor of the charity.

The special use valuation method of § 2032A is available for valuing transfers by gift.

In a typical "estate freeze" involving stock:

Match each statement with the correct choice. Some choices may be used more than once or not used at all -Living trusts.

Understanding and Working With the Federal Tax Law

Corporations: Introduction and Operating Rules

Corporations: Special Situations

Corporations: Organization and Capital Structure

Corporations: Earnings Profits and Dividend Distributions

Corporations: Redemptions and Liquidations

Corporations: Reorganizations

Consolidated Tax Returns

Taxation of International Transactions

Partnerships: Formation, Operation, and Basis

Partnerships: Distributions, Transfer of Interests, and Terminations

S Corporations

Comparative Forms of Doing Business

Taxes on the Financial Statements

Exempt Entities

Multistate Corporate Taxation

Tax Practice and Ethics

The Federal Gift and Estate Taxes

Income Taxation of Trusts and Estates

Filters