Question 1

In valuing a life insurance policy that has not matured (i.e., the insured is still alive), it makes no difference whether the policy is paid up.

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.
-Valuation of a commercial annuity contract.

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 3

In April 2015, Tim makes a gift of real estate (basis of $900,000; fair market value of $800,000) to his Aunt Mabel. After the gift, Mabel makes $50,000 worth of capital improvements to the property. Mabel dies in March 2016, when the property is worth $840,000. Under Mabel's will, the realty passes to Tim. Tim's income tax basis in the property is:

Accepted Answer

A) $840,000. 
B) $890,000. 
C) $900,000. 
D) $950,000. 
E) None of the above. 
A) $840,000. 
B) $890,000. 
C) $900,000. 
D) $950,000. 
E) None of the above.

Question 4

Richard and Marie are joint tenants in a tract of land. Upon Richard's prior death, Marie's income tax basis in the land does not change.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following independent statements correctly reflects the valuation rules applicable to estate and gift taxes?

Accepted Answer

A) In valuing an annuity issued by Prudential Insurance Company, use the tables issued by the IRS. 
B) In valuing an unmatured life insurance policy on which further premiums need to be paid, use the policy's interpolated terminal reserve amount. 
C) In valuing a note receivable, the issuer's bankruptcy should not be taken into account. 
D) In valuing a used car, use the trade-in value offered by a dealership as a down payment on a new model. 
E) None of the above statements is correct. 
A) In valuing an annuity issued by Prudential Insurance Company, use the tables issued by the IRS. 
B) In valuing an unmatured life insurance policy on which further premiums need to be paid, use the policy's interpolated terminal reserve amount. 
C) In valuing a note receivable, the issuer's bankruptcy should not be taken into account. 
D) In valuing a used car, use the trade-in value offered by a dealership as a down payment on a new model. 
E) None of the above statements is correct.

Question 6

With respect to a stock interest in a closely held corporation, which, if any, of the following factors work to increase the gross estate value of the interest?

Accepted Answer

A) The stock is not marketable. 
B) A majority interest is involved. 
C) The profits of the business are less than the industry average. 
D) The blockage rule applies. 
E) None of the above. 
A) The stock is not marketable. 
B) A majority interest is involved. 
C) The profits of the business are less than the industry average. 
D) The blockage rule applies. 
E) None of the above.

Question 7

In a typical estate freeze involving family limited partnerships established by parents for their children:

Accepted Answer

A) By gift, the parents transfer interests as general partners, retaining the limited partnership interests. 
B) By gift, the parents transfer limited partnership interests, retaining the general partner interests. 
C) The interests transferred to the children involve the control of the business. 
D) As to the interests passing to the children, large discounts are claimed due to the blockage factor. 
E) None of the above. 
A) By gift, the parents transfer interests as general partners, retaining the limited partnership interests. 
B) By gift, the parents transfer limited partnership interests, retaining the general partner interests. 
C) The interests transferred to the children involve the control of the business. 
D) As to the interests passing to the children, large discounts are claimed due to the blockage factor. 
E) None of the above.

Question 8

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 9

Violet sells a parcel of land (basis of $100,000; fair market value of $300,000) to her church for $100,000. Violet is allowed a charitable income tax deduction of $200,000.

Accepted Answer

A) True 
 B)False

Question 10

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 11

Which, if any, of the following statements reflects the correct tax valuation rules?

Accepted Answer

A) Amounts listed in the classified section of the newspaper are not representative of the value of tangible personalty. 
B) The value of a note receivable is its face amount. 
C) Sentimental value should not be considered. 
D) The geographical location of the property is not relevant. 
E) None of the above. 
A) Amounts listed in the classified section of the newspaper are not representative of the value of tangible personalty. 
B) The value of a note receivable is its face amount. 
C) Sentimental value should not be considered. 
D) The geographical location of the property is not relevant. 
E) None of the above.

Question 12

Because of the estate tax deduction, a testamentary bequest to charity is preferable to a lifetime transfer.

Accepted Answer

A) True 
 B)False

In valuing a life insurance policy that has not matured (i.e., the insured is still alive), it makes no difference whether the policy is paid up.

Match each statement with the correct choice. Some choices may be used more than once or not used at all. -Valuation of a commercial annuity contract.

Richard and Marie are joint tenants in a tract of land. Upon Richard's prior death, Marie's income tax basis in the land does not change.

Which of the following independent statements correctly reflects the valuation rules applicable to estate and gift taxes?

With respect to a stock interest in a closely held corporation, which, if any, of the following factors work to increase the gross estate value of the interest?

In a typical estate freeze involving family limited partnerships established by parents for their children:

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.

Violet sells a parcel of land (basis of $100,000; fair market value of $300,000) to her church for $100,000. Violet is allowed a charitable income tax deduction of $200,000.

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

Which, if any, of the following statements reflects the correct tax valuation rules?

Because of the estate tax deduction, a testamentary bequest to charity is preferable to a lifetime transfer.

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

In valuing a life insurance policy that has not matured (i.e., the insured is still alive), it makes no difference whether the policy is paid up.

Match each statement with the correct choice. Some choices may be used more than once or not used at all. -Valuation of a commercial annuity contract.

Richard and Marie are joint tenants in a tract of land. Upon Richard's prior death, Marie's income tax basis in the land does not change.

Which of the following independent statements correctly reflects the valuation rules applicable to estate and gift taxes?

With respect to a stock interest in a closely held corporation, which, if any, of the following factors work to increase the gross estate value of the interest?

In a typical estate freeze involving family limited partnerships established by parents for their children:

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.

Violet sells a parcel of land (basis of $100,000; fair market value of $300,000) to her church for $100,000. Violet is allowed a charitable income tax deduction of $200,000.

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

Which, if any, of the following statements reflects the correct tax valuation rules?

Because of the estate tax deduction, a testamentary bequest to charity is preferable to a lifetime transfer.

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