Question 1

On December 1, 1976, Bart made a gift and claimed a $30,000 specific exemption. When Bart died in 2017, his tax base was $2,000,000. Assuming the maximum unified credit is $780,800, what is the credit available when computing Bart's estate tax?

Accepted Answer

The answer of On December 1, 1976, Bart made a...

Question 2

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

Accepted Answer

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

Question 3

In 2001, Polly and Fred, brother and sister, purchased a condominium at a golf resort. Polly contributed 60% of the $200,000 cost; Fred contributed 40%. Polly dies in the current year when the condominium has a $300,000 value. How much is included in Polly's estate?

Accepted Answer

A)  $200,000 
B)  $120,000 
C)  $180,000 
D)  $300,000

Question 4

Identify which of the following statements is true.

Accepted Answer

A)  Casualty or theft losses incurred during the administration of the estate are not deductible on the estate tax return. 
B)  There is a limitation of $100,000 on the charitable contribution deduction for estate tax purposes. 
C)  Administrative expenses are not deductible on the estate's income tax return. 
D)  All of the above are false.

Question 5

Four years ago, Roper transferred to his son ownership of a $100,000 life insurance policy that Roper purchased on his own life in 2000. The cash value of the policy on the transfer date was $25,000. Roper died on March 1st of this year. The amount included in Roper's gross estate due to the life insurance policy is

Accepted Answer

A)  $0. 
B)  $35,000. 
C)  $100,000. 
D)  $25,000.

Question 6

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

Accepted Answer

The answer of Briefly discuss how inter vivos gifts can...

Question 7

Lily dies early in the current year. All her property passes subject to her will, which provides that her surviving husband, Rick, is to receive all the property outright. Her will further states that any property Rick disclaims will pass instead to their children in equal shares. Lily's gross estate is about $10 million, and her Sec. 2053 deductions are very small. Rick, who is in poor health, already owns about $6 million of property. What tax issues should Rick consider with respect to the property bequeathed to him by his wife?

Accepted Answer

The answer of Lily dies early in the current year....

Question 8

Wally died on November 15. His gross estate includes 100 shares of ABC Corporation stock. On November 15, ABC's stock trades were at a high of $100, a low of $92, and a close of $94. What is the per- share value of the stock in Wally's estate?

Accepted Answer

The answer of Wally died on November 15. His gross...

Question 9

Compare the tax treatment of administration expenses with that of the decedent's debts.

Accepted Answer

The answer of Compare the tax treatment of administration expenses...

Question 10

Outline and briefly describe the estate tax computation, beginning with the gross estate.

Accepted Answer

The answer of Outline and briefly describe the estate tax...

Question 11

Five years ago, George and Jerry (his brother) provide $40,000 and $60,000, respectively, to purchase realty titled in the names of George and Jerry as joint tenants with right of survivorship. George dies in the current year and is survived by Jerry. At the time of George's death, the realty is valued at $300,000. What is the value of the realty in George's gross estate?

Accepted Answer

The answer of Five years ago, George and Jerry (his...

Question 12

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

Accepted Answer

The answer of Explain how shares of stock traded on...

Question 13

Ted died on May 3. At the time of his death, he owned a beach house valued at $250,000. On June 10, the beach house was completely destroyed by a hurricane and there was no insurance coverage. If the executor elects to use the alternate valuation date, the executor will

Accepted Answer

A)  take a casualty loss of $250,000 on the estate tax return. 
B)  include the beach house in the gross estate at $250,000. 
C)  take a casualty loss of $250,000 on the estate's income tax return. 
D)  include the beach house in the gross estate at $0.

Question 14

Denise died April 1 and owned several bonds that paid interest March 31 and September 30. Also, she owned stock that paid dividends quarterly on March 31, June 30, September 30, and December 31. Denise's estate received the interest and dividends on the payment dates. What should be included in Denise's gross estate?

Accepted Answer

A)  only interest and dividends received prior to the date of death 
B)  none of the interest and dividends received 
C)  only interest and dividends received after the date of death 
D)  all interest and dividends received in the year of death

Question 15

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

Question 16

The estate tax is a wealth transfer tax.

Accepted Answer

A) True 
 B)False

Question 17

Discuss some of the factors to be considered in determining the amount of property that should pass under the marital deduction.

Accepted Answer

The answer of Discuss some of the factors to be...

Question 18

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

The answer of Guy died this year. His estate includes...

Question 19

For 2014, the unified credit is equivalent to a statutory exemption of

Accepted Answer

A)  $5,340,000. 
B)  $780,800. 
C)  $1,500,000. 
D)  $1,000,000.

Question 20

The gross- up rule requires

Accepted Answer

A)  certain gifts made by the decedent within three years of the date of death are included in the decedent's gross estate. 
B)  all beneficial interests be included in the decedent's estate. 
C)  gift taxes on gifts made by the decedent or the decedent's spouse that are paid by the decedent or his estate during the three- year period ending with the decedent's date of death must be included in the decedent's gross estate. 
D)  post- 1976 gifts by the decedent be included in the decedent's estate.

Exam 13: The Estate Tax