Question 1

The payment date for estate taxes may be extended by the IRS for all of the following reasons except

Accepted Answer

A) the estate includes a 40% interest in a closely held business. 
B) the estate includes a relatively large remainder or reversionary interest. 
C) the executor of the estate shows reasonable cause. 
D) All are valid reasons. 
A) the estate includes a 40% interest in a closely held business. 
B) the estate includes a relatively large remainder or reversionary interest. 
C) the executor of the estate shows reasonable cause. 
D) All are valid reasons.

Question 2

Which of the following credits is available for estate tax purposes?

Accepted Answer

A) investment tax credit 
B) credit for income taxes paid on decedent's final return 
C) credit for estate taxes paid on certain prior transfers 
D) All of the above are available. 
A) investment tax credit 
B) credit for income taxes paid on decedent's final return 
C) credit for estate taxes paid on certain prior transfers 
D) All of the above are available.

Question 3

The GSTT's (generation-skipping transfer tax)purpose is

Accepted Answer

A) to impose a graduated transfer tax one time a generation. 
B) to impose some form of transfer tax one time a generation. 
C) to impose a graduated transfer tax every other generation. 
D) to impose some form of transfer tax every other generation. 
A) to impose a graduated transfer tax one time a generation. 
B) to impose some form of transfer tax one time a generation. 
C) to impose a graduated transfer tax every other generation. 
D) to impose some form of transfer tax every other generation.

Question 4

Dan transfers an apartment building to Grace but retains the right to the rental income for 10 years.Dan dies nine years after the transfer when the building is worth $600,000.The applicable federal rate is 10% and the reversionary actuarial factor is 0.30.How much would be included in Dan's estate?

Accepted Answer

A) $0 
B) $150,000 
C) $350,000 
D) $600,000 
A) $0 
B) $150,000 
C) $350,000 
D) $600,000

Question 5

The alternate valuation date can be elected for estate tax purposes only if the election

Accepted Answer

A) increases the value of the gross estate. 
B) decreases the value of the gross estate. 
C) decreases the estate tax liability (after reduction for tax credits). 
D) Both B and C are required. 
A) increases the value of the gross estate. 
B) decreases the value of the gross estate. 
C) decreases the estate tax liability (after reduction for tax credits). 
D) Both B and C are required.

Question 6

Praneh Patel,a widower,died in March of the current year.His gross estate is $5,325,000,and at the time of his death,he owed debts of $40,000.His will made a charitable bequest of $280,000 and left the rest of his property to his children.His administrative expenses are estimated to be about $55,000.What tax issues should the estate's CPA consider when preparing Praneh's estate tax return and his estate's income tax return?

Accepted Answer

• What deductions will Praneh's estate r

Question 7

Administrative expenses are not deductible on the estate's income tax return.

Accepted Answer

A) True 
 B)False

Question 8

Which of the following is not a test for an interest to qualify for the marital deduction?

Accepted Answer

A) The property must be included in the decedent's gross estate. 
B) If a QTIP transfer is made,the spouse must be entitled to all of the income at least annually for life. 
C) The interest conveyed must not be a nondeductible terminable interest. 
D) All of the above are required. 
A) The property must be included in the decedent's gross estate. 
B) If a QTIP transfer is made,the spouse must be entitled to all of the income at least annually for life. 
C) The interest conveyed must not be a nondeductible terminable interest. 
D) All of the above are required.

Question 9

Briefly discuss how inter vivos gifts can be used to reduce the size of the estate tax base.

Accepted Answer

The $14,000 per-donee per-year exclusion

Question 10

Identify which of the following statements is true.

Accepted Answer

A) The transferee is liable for the generation-skipping transfer tax (GSTT)in the case of a direct skip. 
B) Special use valuation is available for farmland to help alleviate liquidity problems. 
C) Qualified disclaimers are not available for estate planning purposes. 
D) All of the above are false. 
A) The transferee is liable for the generation-skipping transfer tax (GSTT)in the case of a direct skip. 
B) Special use valuation is available for farmland to help alleviate liquidity problems. 
C) Qualified disclaimers are not available for estate planning purposes. 
D) All of the above are false.

Question 11

Identify which of the following statements is true.

Accepted Answer

A) The credit for taxes paid on prior transfers does not reduce the impact of property being taxed in more than one estate in quick succession. 
B) The deduction for state death taxes is not limited. 
C) An estate is not entitled to a credit for foreign death taxes paid on property located in a foreign country and included in the gross estate. 
D) All of the above are false. 
A) The credit for taxes paid on prior transfers does not reduce the impact of property being taxed in more than one estate in quick succession. 
B) The deduction for state death taxes is not limited. 
C) An estate is not entitled to a credit for foreign death taxes paid on property located in a foreign country and included in the gross estate. 
D) All of the above are false.

Question 12

The estate tax return is due,ignoring extensions,3-1/2 months after the decedent's date of death.

Accepted Answer

A) True 
 B)False

Question 13

List the various categories of estate tax deductions,and compare them with the categories of gift tax deductions.What differences exist?

Accepted Answer

Estate tax deductions are as follows: ma

Question 14

Identify which of the following statements is true.

Accepted Answer

A) If a marital deduction is elected on a QTIP trust transfer,property remaining in the QTIP trust is not included in the estate of the surviving spouse. 
B) The credit for state death taxes has been replaced with a deduction for state estate taxes. 
C) The unified credit is the only credit allowed against the estate tax. 
D) All of the above are false. 
A) If a marital deduction is elected on a QTIP trust transfer,property remaining in the QTIP trust is not included in the estate of the surviving spouse. 
B) The credit for state death taxes has been replaced with a deduction for state estate taxes. 
C) The unified credit is the only credit allowed against the estate tax. 
D) All of the above are false.

Question 15

An executor may elect to postpone payment of the estate tax attributable to a remainder or reversionary interest until 6 months after the interests of the other person(s)terminate.

Accepted Answer

A) True 
 B)False

Question 16

Identify which of the following statements is false.

Accepted Answer

A) Special use valuation is available for farmland to help alleviate liquidity problems. 
B) The transferee is liable for the generation-skipping transfer tax (GSTT)in the case of a direct skip. 
C) The generation-skipping transfer tax (GSTT)is imposed to assure that some form of transfer taxation is imposed once a generation. 
D) A direct skip skips one or more generations. 
A) Special use valuation is available for farmland to help alleviate liquidity problems. 
B) The transferee is liable for the generation-skipping transfer tax (GSTT)in the case of a direct skip. 
C) The generation-skipping transfer tax (GSTT)is imposed to assure that some form of transfer taxation is imposed once a generation. 
D) A direct skip skips one or more generations.

Question 17

Guy died this year.His estate includes a closely held business interest valued at $400,000 and other property valued at $675,000.Guy's allowable Sec.2053 and 2054 deductions total $75,000.Within three years of death,partly in hopes of qualifying his estate for the installment payment allowed under Sec.6166 treatment,Guy made gifts of listed securities of $350,000 (at 2002 valuations)and paid no gift tax on the gift.Is Guy's estate eligible for Sec.6166 treatment?

Accepted Answer

No,it fails the 35% test in on

Question 18

Explain how shares of stock traded on a stock exchange are valued.What is the blockage rule?

Accepted Answer

Shares traded on a stock exchange are va

Question 19

In 2014,the unified credit enables an estate valued at $5.34 million or less to not be subject to the estate tax.

Accepted Answer

A) True 
 B)False

Question 20

Brent,who died on January 10,owned 10 shares of Potts Corporation stock.The closest trading dates to January 10 are January 8 (two working days before the date of death)and January 11 (one working day after the date of death).On January 8,the stock traded at a high of 101 and a low of 97,while on January 11,the high was 90 and the low was 86.The date-of-death per-share value is

Accepted Answer

A) $99.00. 
B) $95.33. 
C) $93.50. 
D) $91.67. 
A) $99.00. 
B) $95.33. 
C) $93.50. 
D) $91.67.

Exam 13: The Estate Tax

The payment date for estate taxes may be extended by the IRS for all of the following reasons except

Which of the following credits is available for estate tax purposes?

The GSTT's (generation-skipping transfer tax)purpose is

The alternate valuation date can be elected for estate tax purposes only if the election

Administrative expenses are not deductible on the estate's income tax return.

Which of the following is not a test for an interest to qualify for the marital deduction?

Briefly discuss how inter vivos gifts can be used to reduce the size of the estate tax base.

Identify which of the following statements is true.

Identify which of the following statements is true.

The estate tax return is due,ignoring extensions,3-1/2 months after the decedent's date of death.

List the various categories of estate tax deductions,and compare them with the categories of gift tax deductions.What differences exist?

Identify which of the following statements is true.

An executor may elect to postpone payment of the estate tax attributable to a remainder or reversionary interest until 6 months after the interests of the other person(s)terminate.

Identify which of the following statements is false.

Explain how shares of stock traded on a stock exchange are valued.What is the blockage rule?

In 2014,the unified credit enables an estate valued at $5.34 million or less to not be subject to the estate tax.

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