Exam 19: Family Tax Planning

If a decedent's household goods are sold through public auction, the price received should be the valuation used for Federal estate tax purposes.

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

A gift of installment notes causes any deferred gross profit on the notes to be taxed to the donees.

Natalie creates a trust, income payable to Ava (age 12) for 10 years, remainder to Samantha (age 32). In determining the value of these two gifts (i.e., income interest for a term certain and a remainder interest), use of more than one IRS valuation table will be necessary.

Which, if any, of the following statements properly characterize features involving buy-sell agreements?

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

Doug inherited his mother's bedroom furniture worth $3,000. For sentimental reasons, Martha, the daughter, pays Doug $3,500 for the furniture. The furniture should be included in the mother's gross estate at $3,500.

Match each statement with the correct choice. Some choices may be used more than once or not used at all. -Discount for lack of marketability as to stock.

Match each statement with the correct choice. Some choices may be used more than once or not used at all. -Eliminates common stock from donor's gross estate.

Andrew makes a gift of securities (basis of $1,100,000; fair market value of $800,000) to his son, Carl. What is Carl's income tax basis in the securities if the gift occurred in 2016?

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. -Donee's basis for loss.

The election of special use valuation estate tax savings has income tax implications.

Dustin owns all of the stock of Gold Corporation which includes both common and preferred shares. The preferred stock is noncumulative, has no redemption date, and possesses no liquidation preference. In 1995, Dustin makes a gift to his adult children of all of the common stock. He dies in 2016 still owning the preferred stock. The value of the Gold stock on the relevant dates is: 1995 2016 Preferred \ 400,000 \ 500,000 Common 3,000,000 5,000,000 One of the tax consequences of this estate freeze is:

Match each statement with the correct choice. Some choices may be used more than once or not used at all. -Valuation of a life insurance policy that is not paid up.

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.

In satisfying the more-than-35% test for qualification under § 6166, interests in multiple closely held businesses are aggregated when the decedent's gross estate includes 20% or more of the value of each such business.

The Nelsons make gifts of appreciated securities to their dependent daughter (age 20) and son (age 21), neither of which is a student. If the children sell the securities shortly thereafter, the kiddie tax will apply to tax the gain at the parents' tax rate.

Lisa has been widowed three times. Her first husband died in 2009 leaving an unused exclusion amount of $3.5 million. The second husband died in 2011 leaving the entire $5 million exclusion amount unused. Lisa's third husband died in 2016 with an unused exclusion amount of $4 million. Lisa's DSUE amount is:

Match each statement with the correct choice. Some choices may be used more than once or not used at all. -Surviving owners agree to purchase withdrawing owner's interest.