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. a. Revocable trusts b. Income in respect of a decedent (IRD) 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 (§ 2032A) h. Depreciation recapture potential eliminated i. Alternate valuation date (§ 2032) j. Election to split gifts (§ 2513) k. No correct choice is given -Eliminates preferred stock from donor's gross estate.

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.

Match each statement with the correct choice. Some choices may be used more than once or not used at all. 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 -Corporation agrees to redeem withdrawing shareholder's stock.

A farm has a best use valuation of $3 million and a current use valuation of $1.2 million. If death occurs in 2014 and § 2032A is elected, the farm can be valued in the deceased owner's gross estate at $1.2 million.

Match each statement with the correct choice. Some choices may be used more than once or not used at all. a. Increases the probate estate b. Decreases the probate estate c. Has no effect on the probate estate -Created a living trust.

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.

If a traditional IRA is subject to both estate and income taxes, a withdrawal by the heir constitutes income in respect of a decedent (IRD).

Match each statement with the correct choice. Some choices may be used more than once or not used at all. a. Revocable trusts b. Income in respect of a decedent (IRD) 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 (§ 2032A) h. Depreciation recapture potential eliminated i. Alternate valuation date (§ 2032) j. Election to split gifts (§ 2513) k. No correct choice is given -Transfer by death of depreciable property.