Question 1

One of the advantages of an estate freeze is that the preferred stock is not included in the gross estate of the donor.

Accepted Answer

A) True 
 B)False

Question 2

Match each statement with the correct choice. Some choices may be used more than once or not used at all
-Reasonable cause will justify election.

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 3

Noncommercial annuity contracts should be valued using the tables issued by the IRS.

Accepted Answer

A) True 
 B)False

Question 4

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

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 5

Brad and Heather are husband and wife and live in New Mexico. Under Brad's will, his share of the community property passes to the children. Upon Brad's prior death, there will be a change in Heather's income tax basis in her half of the community property.

Accepted Answer

A) True 
 B)False

Question 6

Match each statement with the correct choice. Some choices may be used more than once or not used at all
-Can produce income tax, ad valorem property tax, and estate tax savings.

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 7

Wesley has created an irrevocable trust: life estate to Eve, remainder to Ernest upon Eve's death. In using the IRS valuation tables, what information is needed to determine the value of Eve's life estate?

Accepted Answer

Besides the amount placed in trust, it i

Question 8

At the time of his death, Rex owned an RV. For valuation purposes, the RV should be included in his gross estate at the price a dealer in RVs would pay for the property.

Accepted Answer

A) True 
 B)False

Question 9

Five years ago, Emma purchased a residence and listed ownership as tenants by the entirety with her husband, Lucas. In the current year, Lucas predeceases Emma. Nothing is included in either the gross estate or probate estate of Lucas.

Accepted Answer

A) True 
 B)False

Question 10

Which, if any, of the following items characterizes § 6166 (i.e., extension of estate tax payments relative to an interest in a closely held business)?

Accepted Answer

A)  No estate tax due need be paid for the first 5 years. 
B)  No interest needs to be paid for the first 5 years. 
C)  In satisfying the more-than-35% test for qualification, all interests in closely held businesses can be aggregated. 
D)  The 2% rate of interest applies to the total amount of estate tax value. 
E)  None of the above. 
A)  No estate tax due need be paid for the first 5 years. 
B)  No interest needs to be paid for the first 5 years. 
C)  In satisfying the more-than-35% test for qualification, all interests in closely held businesses can be aggregated. 
D)  The 2% rate of interest applies to the total amount of estate tax value. 
E)  None of the above.

Question 11

The election of § 2032 (alternate valuation date) for estate tax purposes:

Accepted Answer

A)  Decreases the basis of all assets included in the decedent's estate. 
B)  Has no effect on the overall basis of the assets belonging to the surviving spouse's share of the community property. 
C)  Means that some assets could end up having a higher income tax basis than their date of death value. 
D)  Has no effect on income tax basis if the heirs do not choose to make the election. 
E)  None of the above. 
A)  Decreases the basis of all assets included in the decedent's estate. 
B)  Has no effect on the overall basis of the assets belonging to the surviving spouse's share of the community property. 
C)  Means that some assets could end up having a higher income tax basis than their date of death value. 
D)  Has no effect on income tax basis if the heirs do not choose to make the election. 
E)  None of the above.

Question 12

After a prolonged illness, Avery has been diagnosed as having a terminal illness. Which of the following procedures best improves her Federal gift and estate tax situation?

Accepted Answer

A)  She issues large notes made payable to loved ones to increase her future § 2053 deductions for claims against the estate. 
B)  She makes gifts of her life insurance. 
C)  She makes enough taxable gifts to keep from losing any of her $5 million gift tax exemption equivalent. 
D)  She makes a donation of cash to the building fund of her church. 
E)  None of the above. 
A)  She issues large notes made payable to loved ones to increase her future § 2053 deductions for claims against the estate. 
B)  She makes gifts of her life insurance. 
C)  She makes enough taxable gifts to keep from losing any of her $5 million gift tax exemption equivalent. 
D)  She makes a donation of cash to the building fund of her church. 
E)  None of the above.

Question 13

Match each statement with the correct choice. Some choices may be used more than once or not used at all
-A gift will cause income tax consequences to the donor.

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 14

Which, if any, of the following procedures reduces both Ned's gross estate and probate estate?

Accepted Answer

A)  Ned purchased a CD listing title as "Ned, payable on proof of death to Eileen." Eileen is Ned's niece. 
B)  Four years ago, Ned named his wife as the designated beneficiary of his IRA. (Previously, Ned's estate was the designated beneficiary.) 
C)  Using her funds, Ned's wife purchased real estate listing herself and Ned as "tenants by the entirety with right of survivorship." 
D)  Four years ago, Ned made a gift of an insurance policy on his life to his daughter (the designated beneficiary). 
E)  None of the above. 
A)  Ned purchased a CD listing title as "Ned, payable on proof of death to Eileen." Eileen is Ned's niece. 
B)  Four years ago, Ned named his wife as the designated beneficiary of his IRA. (Previously, Ned's estate was the designated beneficiary.) 
C)  Using her funds, Ned's wife purchased real estate listing herself and Ned as "tenants by the entirety with right of survivorship." 
D)  Four years ago, Ned made a gift of an insurance policy on his life to his daughter (the designated beneficiary). 
E)  None of the above.

Question 15

In 2013, Valerie made a gift of stock (basis of $114,000; fair market value of $414,000) to her grandson, Ryan. As a result of the transfer, Valerie paid a gift tax of $20,000. Ryan's income tax basis in the stock is:

Accepted Answer

A)  $114,000 for gain or loss. 
B)  $129,000 for gain and $114,000 for loss. 
C)  $129,000 for gain or loss. 
D)  $134,000 for gain or loss. 
E)  None of the above. 
A)  $114,000 for gain or loss. 
B)  $129,000 for gain and $114,000 for loss. 
C)  $129,000 for gain or loss. 
D)  $134,000 for gain or loss. 
E)  None of the above.

Question 16

If depreciable property is transferred by gift, any depreciation recapture potential carries over to the donee.

Accepted Answer

A) True 
 B)False

Question 17

Cost and time are usually saved by passing ownership to out-of-state real estate by death rather than by gift.

Accepted Answer

A) True 
 B)False

Question 18

Match each statement with the correct choice. Some choices may be used more than once or not used at all
-Discount attributable to a large number of shares.

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 19

In 1990, Jude, a resident of New York, purchases realty for $500,000 listing title as "Jude and Tony, joint tenants with right of survivorship." In 2015, Tony predeceases Jude when the realty is worth $2,000,000. Tony's heirs have an income tax basis in the property of:

Accepted Answer

A)  $0. 
B)  $250,000. 
C)  $1,000,000. 
D)  $1,250,000. 
E)  $2,250,000. 
A)  $0. 
B)  $250,000. 
C)  $1,000,000. 
D)  $1,250,000. 
E)  $2,250,000.

Question 20

Any recapture of special use valuation estate tax savings is imposed on the executor of the estate.

Accepted Answer

A) True 
 B)False

One of the advantages of an estate freeze is that the preferred stock is not included in the gross estate of the donor.

Match each statement with the correct choice. Some choices may be used more than once or not used at all -Reasonable cause will justify election.

Noncommercial annuity contracts should be valued using the tables issued by the IRS.

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

Brad and Heather are husband and wife and live in New Mexico. Under Brad's will, his share of the community property passes to the children. Upon Brad's prior death, there will be a change in Heather's income tax basis in her half of the community property.

Match each statement with the correct choice. Some choices may be used more than once or not used at all -Can produce income tax, ad valorem property tax, and estate tax savings.

Wesley has created an irrevocable trust: life estate to Eve, remainder to Ernest upon Eve's death. In using the IRS valuation tables, what information is needed to determine the value of Eve's life estate?

At the time of his death, Rex owned an RV. For valuation purposes, the RV should be included in his gross estate at the price a dealer in RVs would pay for the property.

Five years ago, Emma purchased a residence and listed ownership as tenants by the entirety with her husband, Lucas. In the current year, Lucas predeceases Emma. Nothing is included in either the gross estate or probate estate of Lucas.

Which, if any, of the following items characterizes § 6166 (i.e., extension of estate tax payments relative to an interest in a closely held business)?

The election of § 2032 (alternate valuation date) for estate tax purposes:

After a prolonged illness, Avery has been diagnosed as having a terminal illness. Which of the following procedures best improves her Federal gift and estate tax situation?

Match each statement with the correct choice. Some choices may be used more than once or not used at all -A gift will cause income tax consequences to the donor.

Which, if any, of the following procedures reduces both Ned's gross estate and probate estate?

In 2013, Valerie made a gift of stock (basis of $114,000; fair market value of $414,000) to her grandson, Ryan. As a result of the transfer, Valerie paid a gift tax of $20,000. Ryan's income tax basis in the stock is:

If depreciable property is transferred by gift, any depreciation recapture potential carries over to the donee.

Cost and time are usually saved by passing ownership to out-of-state real estate by death rather than by gift.

Match each statement with the correct choice. Some choices may be used more than once or not used at all -Discount attributable to a large number of shares.

In 1990, Jude, a resident of New York, purchases realty for $500,000 listing title as "Jude and Tony, joint tenants with right of survivorship." In 2015, Tony predeceases Jude when the realty is worth $2,000,000. Tony's heirs have an income tax basis in the property of:

Any recapture of special use valuation estate tax savings is imposed on the executor of the estate.

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 advantages of an estate freeze is that the preferred stock is not included in the gross estate of the donor.

Match each statement with the correct choice. Some choices may be used more than once or not used at all -Reasonable cause will justify election.

Noncommercial annuity contracts should be valued using the tables issued by the IRS.

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

Brad and Heather are husband and wife and live in New Mexico. Under Brad's will, his share of the community property passes to the children. Upon Brad's prior death, there will be a change in Heather's income tax basis in her half of the community property.

Match each statement with the correct choice. Some choices may be used more than once or not used at all -Can produce income tax, ad valorem property tax, and estate tax savings.

Wesley has created an irrevocable trust: life estate to Eve, remainder to Ernest upon Eve's death. In using the IRS valuation tables, what information is needed to determine the value of Eve's life estate?

At the time of his death, Rex owned an RV. For valuation purposes, the RV should be included in his gross estate at the price a dealer in RVs would pay for the property.

Five years ago, Emma purchased a residence and listed ownership as tenants by the entirety with her husband, Lucas. In the current year, Lucas predeceases Emma. Nothing is included in either the gross estate or probate estate of Lucas.

Which, if any, of the following items characterizes § 6166 (i.e., extension of estate tax payments relative to an interest in a closely held business)?

The election of § 2032 (alternate valuation date) for estate tax purposes:

After a prolonged illness, Avery has been diagnosed as having a terminal illness. Which of the following procedures best improves her Federal gift and estate tax situation?

Match each statement with the correct choice. Some choices may be used more than once or not used at all -A gift will cause income tax consequences to the donor.

Which, if any, of the following procedures reduces both Ned's gross estate and probate estate?

In 2013, Valerie made a gift of stock (basis of $114,000; fair market value of $414,000) to her grandson, Ryan. As a result of the transfer, Valerie paid a gift tax of $20,000. Ryan's income tax basis in the stock is:

If depreciable property is transferred by gift, any depreciation recapture potential carries over to the donee.

Cost and time are usually saved by passing ownership to out-of-state real estate by death rather than by gift.

Match each statement with the correct choice. Some choices may be used more than once or not used at all -Discount attributable to a large number of shares.

In 1990, Jude, a resident of New York, purchases realty for $500,000 listing title as "Jude and Tony, joint tenants with right of survivorship." In 2015, Tony predeceases Jude when the realty is worth $2,000,000. Tony's heirs have an income tax basis in the property of:

Any recapture of special use valuation estate tax savings is imposed on the executor of the estate.

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