Question 1

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 2

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." 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 3

Match each statement with the correct choice. Some choices may be used more than once or not used at all.
-Election by estate will reduce the amount of the gross estate.

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 4

Neither the transfer by gift or by death avoids the recognition (for income tax purposes) of any deferred interest on U.S. savings bonds.

Accepted Answer

A) True 
 B)False

Question 5

A disclaimer by a surviving spouse will generate additional estate tax because it reduces the amount of marital deduction allowed.

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.
-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 7

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

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.
-Decedent owned stock that had depreciated in value.

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

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 10

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 11

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 12

In 2016, Donna's father dies and leaves her the family farm. The farm has a current use value of $4,000,000 and a best use value of $4,500,000. If the § 2032A election is made, the farm should be included in the father's gross estate at a value of:

Accepted Answer

A) $1,110,000. 
B) $2,890,000 ($4,000,000 - $1,110,000). 
C) $3,390,000 ($4,500,000 - $1,110,000). 
D) $4,000,000. 
E) None of the above. 
A) $1,110,000. 
B) $2,890,000 ($4,000,000 - $1,110,000). 
C) $3,390,000 ($4,500,000 - $1,110,000). 
D) $4,000,000. 
E) None of the above.

Question 13

As to property received as a gift, a donee's income tax basis for gain or loss may not be the same.

Accepted Answer

A) True 
 B)False

Question 14

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

Accepted Answer

A) True 
 B)False

Question 15

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 16

Match each statement with the correct choice. Some choices may be used more than once or not used at all.
-No step-up in basis at death.

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 17

A recapture of special use valuation will occur even if a qualified heir ceases to use the property for farming purposes but does not otherwise dispose of it.

Accepted Answer

A) True 
 B)False

Question 18

A decedent owned 25% of the voting stock of Siskin Corporation. Siskin has 53 shareholders. The decedent's estate cannot qualify for the § 6166 election.

Accepted Answer

A) True 
 B)False

Question 19

Which, if any, of the items listed below are valid factors utilized in valuing the stock in a closely held corporation?

Accepted Answer

A) The company's dividend-paying capacity. 
B) The nature of the business. 
C) The history of the company since its inception. 
D) The book value of the stock. 
E) All of the above. 
A) The company's dividend-paying capacity. 
B) The nature of the business. 
C) The history of the company since its inception. 
D) The book value of the stock. 
E) All of the above.

Question 20

Chloe makes a gift of stock in Snipe Corporation, which is not closely held but is traded in an over-the-counter market. The transactions involving this stock that occurred closest to the date of gift took place five trading days before (mean selling price of $130) and seven days after (mean selling price of $140). Determine the fair market value of the Snipe stock on the date of the gift.

Accepted Answer

$134.17. d

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.

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." Tony predeceases Jude when the realty is worth $2,000,000. Tony's heirs have an income tax basis in the property of:

Match each statement with the correct choice. Some choices may be used more than once or not used at all. -Election by estate will reduce the amount of the gross estate.

Neither the transfer by gift or by death avoids the recognition (for income tax purposes) of any deferred interest on U.S. savings bonds.

A disclaimer by a surviving spouse will generate additional estate tax because it reduces the amount of marital deduction allowed.

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).

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

Match each statement with the correct choice. Some choices may be used more than once or not used at all. -Decedent owned stock that had depreciated in value.

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

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.

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.

In 2016, Donna's father dies and leaves her the family farm. The farm has a current use value of $4,000,000 and a best use value of $4,500,000. If the § 2032A election is made, the farm should be included in the father's gross estate at a value of:

As to property received as a gift, a donee's income tax basis for gain or loss may not be the same.

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

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?

Match each statement with the correct choice. Some choices may be used more than once or not used at all. -No step-up in basis at death.

A recapture of special use valuation will occur even if a qualified heir ceases to use the property for farming purposes but does not otherwise dispose of it.

A decedent owned 25% of the voting stock of Siskin Corporation. Siskin has 53 shareholders. The decedent's estate cannot qualify for the § 6166 election.

Which, if any, of the items listed below are valid factors utilized in valuing the stock in a closely held corporation?

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

Multi-State Corporate Taxations

Tax Practice and Ethics

The Federal Gift and Estate Taxes

Income Taxation of Trusts and Estates

Filters

Exam 19: Family Tax Planning

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.

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." Tony predeceases Jude when the realty is worth $2,000,000. Tony's heirs have an income tax basis in the property of:

Match each statement with the correct choice. Some choices may be used more than once or not used at all. -Election by estate will reduce the amount of the gross estate.

Neither the transfer by gift or by death avoids the recognition (for income tax purposes) of any deferred interest on U.S. savings bonds.

A disclaimer by a surviving spouse will generate additional estate tax because it reduces the amount of marital deduction allowed.

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).

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

Match each statement with the correct choice. Some choices may be used more than once or not used at all. -Decedent owned stock that had depreciated in value.

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

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.

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.

In 2016, Donna's father dies and leaves her the family farm. The farm has a current use value of $4,000,000 and a best use value of $4,500,000. If the § 2032A election is made, the farm should be included in the father's gross estate at a value of:

As to property received as a gift, a donee's income tax basis for gain or loss may not be the same.

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

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?

Match each statement with the correct choice. Some choices may be used more than once or not used at all. -No step-up in basis at death.

A recapture of special use valuation will occur even if a qualified heir ceases to use the property for farming purposes but does not otherwise dispose of it.

A decedent owned 25% of the voting stock of Siskin Corporation. Siskin has 53 shareholders. The decedent's estate cannot qualify for the § 6166 election.

Which, if any, of the items listed below are valid factors utilized in valuing the stock in a closely held corporation?

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

Multi-State Corporate Taxations

Tax Practice and Ethics

The Federal Gift and Estate Taxes

Income Taxation of Trusts and Estates

Filters