Exam 19: Family Tax Planning

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 2012 with an unused exclusion amount of $4 million. Lisa's DSUE amount is:

Several years ago, Tad purchased land listing ownership as "Tad, Ellen, and Kay, equal tenants in common." In the current year, Kay dies first. One­third of the value of the land is included in Kay's probate estate.

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.

After a prolonged illness, Avery has been diagnosed as having a terminal illness. Which of the following procedures best improves her Federal gift and estate tax situation?

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 -Made life insurance payable to estate.

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.

In a typical "estate freeze" involving stock:

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 during life an irrevocable trust naming others as beneficiaries.

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

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

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

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.

Travis and Kim acquire land in 1985 for $900,000 with Travis furnishing $300,000 and Kim $600,000 of the purchase price. Title to the property is listed as equal joint tenancy with right of survivorship. Kim dies first in 2013, when the land is worth $3,000,000. What is Travis's income tax basis in the property under each of the following assumptions? a. Travis and Kim are brother and sister. b. Travis and Kim are husband and wife. c. Travis and Kim are husband and wife and the land is community property.

Presuming the § 2032A election is properly made in 2013, what value is included in the gross estate in each of the following independent situations?

Even though it results in more estate tax liability, the executor of an estate uses date of death value (rather than § 2032 alternate valuation date). a. Why? b. Would it matter if community property is involved?

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

Describe the various tax advantages that are available from donating a conservation easement to charity.

Which, if any, of the following factors should reduce the value of a note receivable included in the gross estate of the holder?

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?

Fred and Pearl always have lived in a community property state. At the time of Fred's prior death in 2013, they held stock that cost them $600,000 but was valued as follows. Date of Death Six Months Later $5,300,000 $5,200,000 Under Fred's will, his half of the stock passes to their daughter, Brandi. What income tax basis will Pearl and Brandi have in the stock, if Fred's estate: a. Elects the alternate valuation date of § 2032? b. Does not elect the alternate valuation date of § 2032?