Exam 19: Family Tax Planning

Which, if any, of the following procedures reduces both Ned's gross estate and probate estate?

Match each statement with the correct choice. Some choices may be used more than once or not used at all. 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 (IRD) k. No correct choice is given -Deferral approach.

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

Match each statement with the correct choice. Some choices may be used more than once or not used at all. 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 (IRD) k. No correct choice is given -A gift will cause income tax consequences to the donor.

Robert and Kristen are husband and wife. Ten years ago, they purchased stock for $500,000. Kristen dies first in 2013 when the property is worth $1,000,000. Assuming the property passes to Robert, what is his income tax basis under the following ownership assumptions? a. A tenancy by the entirety is involved. b. Community property is involved. c. Why are the results different?

Match each statement with the correct choice. Some choices may be used more than once or not used at all. 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 (IRD) k. No correct choice is given -A gift will not cause income tax consequences to the donor.

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 -Doubles the number of annual exclusions available.

The deferral approach to the estate tax marital deduction is advisable if the surviving spouse is in good health and has few assets.

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 -Established a joint tenancy with right of survivorship.

During 2013, it is possible for a surviving spouse to have an exclusion amount of as much as $10.5 million.

Application of the blockage rule has not been limited to just the valuation of stocks and securities but has been applied to other assets.

Rick and Gail are equal tenants in common in real estate. Upon Gail's prior death, Rick's basis in the real estate does not change.

Paul dies and leaves his traditional IRA to Evelyn. Which statement is correct?

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.

In making a choice as to which assets to use in carrying out a program of lifetime giving, comment on the use of each of the following assets. a. Assets that have declined in value. b. Land that has appreciated in value. c. Life insurance policies. d. Out-of-state realty.

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 -Can postpone the payment of any estate tax for 5 years from due date of the return.

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 -Election by estate will reduce the amount of the gross estate.

Which, if any, of the following items characterizes § 6166 (i.e., extension of estate tax payments relative to an interest in a closely held business)?

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 -Valuation of a commercial annuity contract.

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 -Discount for lack of marketability as to stock.