Question 1

In making a choice as to which assets to use in carrying out a program of lifetime giving,comment on each of the following assets.

Accepted Answer

The answer of In making a choice as to which...

Question 2

In 1990,Gloria purchased as an investment unimproved land for $50,000.In 2012,she sells the land,now worth $200,000,to her church for $50,000.As a result of this transaction,Gloria reports:

Accepted Answer

A) No gain and no charitable deduction. 
B) No gain and a charitable deduction of $50,000. 
C) No gain and a charitable deduction of $150,000. 
D) A $37,500 capital gain and a charitable deduction of $150,000. 
E) A $150,000 capital gain and a charitable deduction of $200,000. 
A) No gain and no charitable deduction. 
B) No gain and a charitable deduction of $50,000. 
C) No gain and a charitable deduction of $150,000. 
D) A $37,500 capital gain and a charitable deduction of $150,000. 
E) A $150,000 capital gain and a charitable deduction of $200,000.

Question 3

When will the price specified in a buy and sell agreement control the value used for estate tax purposes?

Accepted Answer

The price set forth

Question 4

Curt owns the following assets which he gives to his daughter Carla in 2012 (no gift tax results).   Both items have been held by Curt as an investment for more than one year.If Carla immediately sells these assets for $1 million ($400,000 + $600,000),she recognizes:

Accepted Answer

A) No gain or loss. 
B) A $200,000 LTCG and no loss. 
C) A $200,000 STCG and $200,000 STCL. 
D) A $200,000 STCG and no loss. 
E) A $200,000 LTCG and $200,000 LTCL. 
A) No gain or loss. 
B) A $200,000 LTCG and no loss. 
C) A $200,000 STCG and $200,000 STCL. 
D) A $200,000 STCG and no loss. 
E) A $200,000 LTCG and $200,000 LTCL.

Question 5

Which,if any,are characteristics of the valuation tables issued by the IRS?

Accepted Answer

A) The IRS must issue new updated tables once a year. 
B) To determine the factor for a remainder interest,subtract the life estate factor provided in the table from one. 
C) The same table that provides the factor for a life estate can be used to determine the value of an income interest for a term certain. 
D) To use the tables,the Federal mid-term interest rate for the month of the transfer must be known. 
E) None of the above. 
A) The IRS must issue new updated tables once a year. 
B) To determine the factor for a remainder interest,subtract the life estate factor provided in the table from one. 
C) The same table that provides the factor for a life estate can be used to determine the value of an income interest for a term certain. 
D) To use the tables,the Federal mid-term interest rate for the month of the transfer must be known. 
E) None of the above.

Question 6

What is the rationale for the deferral and the equalization approaches to the marital deduction?

Accepted Answer

The deferral approach is based on the no

Question 7

Two years ago,Ellen created a revocable trust-life estate to her children,remainder to her grandchildren.When Ellen dies in the current year,none of the trust is included in her gross estate or her probate estate.

Accepted Answer

A) True 
 B)False

Question 8

The recapture of special use valuation estate tax savings will not have income tax implications.

Accepted Answer

A) True 
 B)False

Question 9

If the special use valuation method of § 2032A is elected and certain continuing requirements are not satisfied,recapture occurs.

Accepted Answer

The answer of If the special use valuation method of...

Question 10

Jim makes a gift of property (basis of $800,000;fair market value of $600,000)to his wife,Molly.Six months later Molly dies,and under her will,the property (now worth $700,000)returns to Jim.Jim's income tax basis in the property now is $800,000.

Accepted Answer

A) True 
 B)False

Question 11

One of the advantages of an estate freeze is that the common stock is not included in the gross estate of the donor.

Accepted Answer

A) True 
 B)False

Question 12

In making gifts of property to family members,which of the following generates income tax consequences to the donor?

Accepted Answer

A) Transferring U.S.savings bonds. 
B) Transferring an installment note receivable. 
C) Making a contribution to a § 529 plan on behalf of the donee. 
D) Transferring real estate which has a potential for depreciation recapture. 
E) Choices a.and b.but not c.and d. 
A) Transferring U.S.savings bonds. 
B) Transferring an installment note receivable. 
C) Making a contribution to a § 529 plan on behalf of the donee. 
D) Transferring real estate which has a potential for depreciation recapture. 
E) Choices a.and b.but not c.and d.

Question 13

If depreciable property is passed by death,any depreciation recapture potential carries over to the heir.

Accepted Answer

A) True 
 B)False

Question 14

In satisfying the more-than-35% test of § 6166 (i.e. ,extended estate tax payment schedule relative to an interest in a closely held business),prior gifts the decedent may have made are not considered.

Accepted Answer

A) True 
 B)False

Question 15

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)?

Accepted Answer

A) No estate tax due need be paid for the first 5 years. 
B) No interest needs to be paid for the first 5 years. 
C) In satisfying the more-than-35% test for qualification,all interests in closely held businesses can be aggregated. 
D) The 2% rate of interest applies to the total amount of estate tax value. 
E) None of the above. 
A) No estate tax due need be paid for the first 5 years. 
B) No interest needs to be paid for the first 5 years. 
C) In satisfying the more-than-35% test for qualification,all interests in closely held businesses can be aggregated. 
D) The 2% rate of interest applies to the total amount of estate tax value. 
E) None of the above.

Question 16

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

Accepted Answer

A) Because of the step-up in basis received at death,the IRA causes no income tax consequences to Evelyn. 
B) The IRA is not included in Paul's gross estate. 
C) If Evelyn is Paul's daughter,she can defer any distributions from the IRA until she reaches age 70 1/2 without causing any adverse tax consequences. 
D) If Evelyn is Paul's surviving spouse,she can roll over the IRA into her own IRA without causing any adverse tax consequences. 
E) None of the above. 
A) Because of the step-up in basis received at death,the IRA causes no income tax consequences to Evelyn. 
B) The IRA is not included in Paul's gross estate. 
C) If Evelyn is Paul's daughter,she can defer any distributions from the IRA until she reaches age 70 1/2 without causing any adverse tax consequences. 
D) If Evelyn is Paul's surviving spouse,she can roll over the IRA into her own IRA without causing any adverse tax consequences. 
E) None of the above.

Question 17

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 not apply to tax the gain at the parents' tax rate.

Accepted Answer

A) True 
 B)False

Question 18

Liam and Isla are husband and wife and have always lived in a community property state.At the time of Isla's prior death,part of their community property includes:   Under Isla's will,all of her property passes to Liam.After Isla's death,Liam's income tax basis in this property is:

Accepted Answer

A) $2,500,000. 
B) $3,500,000. 
C) $7,000,000. 
D) $8,000,000. 
E) None of the above. 
A) $2,500,000. 
B) $3,500,000. 
C) $7,000,000. 
D) $8,000,000. 
E) None of the above.

Question 19

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

Accepted Answer

A) She makes gifts to family members to help her estate qualify under § 6166 (extension of estate tax payments relative to an interest in a closely held business). 
B) She issues large notes made payable to loved ones to increase her future § 2053 deductions for claims against the estate. 
C) She makes gifts of her life insurance. 
D) She makes enough taxable gifts to keep from losing any of her $5 million gift tax exemption equivalent. 
E) None of the above. 
A) She makes gifts to family members to help her estate qualify under § 6166 (extension of estate tax payments relative to an interest in a closely held business). 
B) She issues large notes made payable to loved ones to increase her future § 2053 deductions for claims against the estate. 
C) She makes gifts of her life insurance. 
D) She makes enough taxable gifts to keep from losing any of her $5 million gift tax exemption equivalent. 
E) None of the above.

Question 20

Buy and sell agreements can be used to help solve the estate tax valuation problems involved in the transfer by death of an interest in a small business.

Accepted Answer

A) True 
 B)False

In making a choice as to which assets to use in carrying out a program of lifetime giving,comment on each of the following assets.

In 1990,Gloria purchased as an investment unimproved land for $50,000.In 2012,she sells the land,now worth $200,000,to her church for $50,000.As a result of this transaction,Gloria reports:

When will the price specified in a buy and sell agreement control the value used for estate tax purposes?

Curt owns the following assets which he gives to his daughter Carla in 2012 (no gift tax results). Both items have been held by Curt as an investment for more than one year.If Carla immediately sells these assets for $1 million ($400,000 + $600,000),she recognizes:

Which,if any,are characteristics of the valuation tables issued by the IRS?

What is the rationale for the deferral and the equalization approaches to the marital deduction?

Two years ago,Ellen created a revocable trust-life estate to her children,remainder to her grandchildren.When Ellen dies in the current year,none of the trust is included in her gross estate or her probate estate.

The recapture of special use valuation estate tax savings will not have income tax implications.

If the special use valuation method of § 2032A is elected and certain continuing requirements are not satisfied,recapture occurs.

Jim makes a gift of property (basis of $800,000;fair market value of $600,000)to his wife,Molly.Six months later Molly dies,and under her will,the property (now worth $700,000)returns to Jim.Jim's income tax basis in the property now is $800,000.

One of the advantages of an estate freeze is that the common stock is not included in the gross estate of the donor.

In making gifts of property to family members,which of the following generates income tax consequences to the donor?

If depreciable property is passed by death,any depreciation recapture potential carries over to the heir.

In satisfying the more-than-35% test of § 6166 (i.e. ,extended estate tax payment schedule relative to an interest in a closely held business),prior gifts the decedent may have made are not considered.

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)?

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

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 not apply to tax the gain at the parents' tax rate.

Liam and Isla are husband and wife and have always lived in a community property state.At the time of Isla's prior death,part of their community property includes: Under Isla's will,all of her property passes to Liam.After Isla's death,Liam's income tax basis in this property is:

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

Buy and sell agreements can be used to help solve the estate tax valuation problems involved in the transfer by death of an interest in a small business.

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

Multistate Corporate Taxation

Tax Practice and Ethics

The Federal Gift and Estate Taxes

Income Taxation of Trusts and Estates

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Exam 19: Family Tax Planning

In making a choice as to which assets to use in carrying out a program of lifetime giving,comment on each of the following assets.

In 1990,Gloria purchased as an investment unimproved land for $50,000.In 2012,she sells the land,now worth $200,000,to her church for $50,000.As a result of this transaction,Gloria reports:

When will the price specified in a buy and sell agreement control the value used for estate tax purposes?

Curt owns the following assets which he gives to his daughter Carla in 2012 (no gift tax results). Both items have been held by Curt as an investment for more than one year.If Carla immediately sells these assets for $1 million ($400,000 + $600,000),she recognizes:

Which,if any,are characteristics of the valuation tables issued by the IRS?

What is the rationale for the deferral and the equalization approaches to the marital deduction?

Two years ago,Ellen created a revocable trust-life estate to her children,remainder to her grandchildren.When Ellen dies in the current year,none of the trust is included in her gross estate or her probate estate.

The recapture of special use valuation estate tax savings will not have income tax implications.

If the special use valuation method of § 2032A is elected and certain continuing requirements are not satisfied,recapture occurs.

Jim makes a gift of property (basis of $800,000;fair market value of $600,000)to his wife,Molly.Six months later Molly dies,and under her will,the property (now worth $700,000)returns to Jim.Jim's income tax basis in the property now is $800,000.

One of the advantages of an estate freeze is that the common stock is not included in the gross estate of the donor.

In making gifts of property to family members,which of the following generates income tax consequences to the donor?

If depreciable property is passed by death,any depreciation recapture potential carries over to the heir.

In satisfying the more-than-35% test of § 6166 (i.e. ,extended estate tax payment schedule relative to an interest in a closely held business),prior gifts the decedent may have made are not considered.

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)?

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

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 not apply to tax the gain at the parents' tax rate.

Liam and Isla are husband and wife and have always lived in a community property state.At the time of Isla's prior death,part of their community property includes: Under Isla's will,all of her property passes to Liam.After Isla's death,Liam's income tax basis in this property is:

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

Buy and sell agreements can be used to help solve the estate tax valuation problems involved in the transfer by death of an interest in a small business.

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

Multistate Corporate Taxation

Tax Practice and Ethics

The Federal Gift and Estate Taxes

Income Taxation of Trusts and Estates

Filters