Question 1

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), some prior gifts the decedent may have made must be considered.

Accepted Answer

A) True 
 B)False

Question 2

A recapture of special use valuation will not occur if a qualified heir ceases to use the property for farming purposes but does not otherwise dispose of it.

Accepted Answer

A) True 
 B)False

Question 3

A well-known artist dies and among her assets are a large number of her paintings. What approach might be taken to lower the value of her estate?

Accepted Answer

The answer of A well-known artist dies and among her...

Question 4

Dustin owns all of the stock of Gold Corporation which includes both common and preferred shares. The preferred stock is noncumulative, has no redemption date, and possesses no liquidation preference. In 1995, Dustin makes a gift to his adult children of all of the common stock. He dies in 2011 still owning the preferred stock. The value of the Gold stock on the relevant dates is:  One of the tax consequences of this estate freeze is:

Accepted Answer

A)  Dustin's gross estate includes $0 as to the stock. 
B)  Dustin's gross estate includes $5,000,000 as to the stock. 
C)  Dustin made a gift of $400,000 in 1995. 
D)  Dustin made a gift of $3,400,000 in 1995. 
E)  None of the above is correct.

Question 5

If a decedent's household goods are sold through public auction, the price received should be the valuation used for Federal estate tax purposes.

Accepted Answer

A) True 
 B)False

Question 6

Because of the estate tax deduction, a testamentary bequest to charity is preferable to a lifetime transfer.

Accepted Answer

A) True 
 B)False

Question 7

Clancy and Maureen are husband and wife and have always lived in a community property state. When Clancy learns that he is terminally ill, he gives to Maureen all of his share of the community investments that have declined in value. Why?

Accepted Answer

The answer of Clancy and Maureen are husband and wife...

Question 8

Neither the transfer by gift or by death avoids the recognition (for income tax purposes) of any deferred interest on U.S. savings bonds.

Accepted Answer

A) True 
 B)False

Question 9

Brad and Heather are husband and wife and live in New Mexico. Under Brad's will, his share of the community property passes to the children. Upon Brad's prior death, there will be a change in Heather's income tax basis in her half of the community property.

Accepted Answer

A) True 
 B)False

Question 10

Match each statement with the correct choice. Some choices may be used more than once or not used at all.

Accepted Answer

The answer of Match each statement with the correct choice....

Question 11

Herbert leaves one-half of his estate to his wife, Ramona, and the remainder to a qualified charity. Herbert's estate taxes would not be reduced if Ramona disclaims her interest in favor of the charity.

Accepted Answer

A) True 
 B)False

Question 12

Several years ago, Tad purchased land listing ownership as "Tad, Ellen, and Kay, equal tenants in common." In the current year, Kay dies first. None of the value of the land is included in Kay's probate estate.

Accepted Answer

A) True 
 B)False

Question 13

Ten years ago, Austin purchased a residence listing ownership as tenants by the entirety with his wife, Jean. In the current year, Austin predeceases Jean. As to the residence, nothing is included in Austin's probate estate.

Accepted Answer

A) True 
 B)False

Question 14

The special use valuation method of § 2032A is available for valuing transfers by gift.

Accepted Answer

A) True 
 B)False

Question 15

Edgar creates a trust, life estate to Connie (age 46), remainder to Gene (age 18). In determining the value of the life estate, use the multiple given in the IRS valuation table for a person age 18.

Accepted Answer

A) True 
 B)False

Question 16

Carol inherits her father's farm, and the executor of the estate properly makes a § 2032A election. Five years later, Carol sells the farm. It is determined that the election, which allowed $800,000 in value to be excluded, saved $160,000 in estate taxes. What are Carol's tax options? Tax consequences?

Accepted Answer

The answer of Carol inherits her father's farm, and the...

Question 17

In 1990, Gloria purchased as an investment unimproved land for $50,000. In 2011, 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 $150,000 capital gain and a charitable deduction of $200,000. 
E)  A $37,500 capital gain and a charitable deduction of $150,000.

Question 18

Mel's estate includes a number of notes receivable signed by his daughter, Tammy. These notes were issued by Tammy on different occasions when she obtained funds from Mel. The total face amount of these notes is $150,000. The notes are forgiven by Mel's will. How much, if any, regarding these notes should be included in Mel's gross estate?

Accepted Answer

The answer of Mel's estate includes a number of notes...

Question 19

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.

Accepted Answer

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

Question 20

Joseph makes a gift of securities (basis of $900,000; fair market value of $600,000) to his son, Earl. As a result of the transfer, Joseph paid a gift tax of $90,000. What is Earl's income tax basis in the securities if the gift occurred in 2011?

Accepted Answer

The answer of Joseph makes a gift of securities (basis...

Exam 19: Family Tax Planning

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), some prior gifts the decedent may have made must be considered.

A recapture of special use valuation will not occur if a qualified heir ceases to use the property for farming purposes but does not otherwise dispose of it.

A well-known artist dies and among her assets are a large number of her paintings. What approach might be taken to lower the value of her estate?

If a decedent's household goods are sold through public auction, the price received should be the valuation used for Federal estate tax purposes.

Because of the estate tax deduction, a testamentary bequest to charity is preferable to a lifetime transfer.

Clancy and Maureen are husband and wife and have always lived in a community property state. When Clancy learns that he is terminally ill, he gives to Maureen all of his share of the community investments that have declined in value. Why?

Neither the transfer by gift or by death avoids the recognition (for income tax purposes) of any deferred interest on U.S. savings bonds.

Brad and Heather are husband and wife and live in New Mexico. Under Brad's will, his share of the community property passes to the children. Upon Brad's prior death, there will be a change in Heather's income tax basis in her half of the community property.

Match each statement with the correct choice. Some choices may be used more than once or not used at all.

Herbert leaves one-half of his estate to his wife, Ramona, and the remainder to a qualified charity. Herbert's estate taxes would not be reduced if Ramona disclaims her interest in favor of the charity.

Several years ago, Tad purchased land listing ownership as "Tad, Ellen, and Kay, equal tenants in common." In the current year, Kay dies first. None of the value of the land is included in Kay's probate estate.

Ten years ago, Austin purchased a residence listing ownership as tenants by the entirety with his wife, Jean. In the current year, Austin predeceases Jean. As to the residence, nothing is included in Austin's probate estate.

The special use valuation method of § 2032A is available for valuing transfers by gift.

Edgar creates a trust, life estate to Connie (age 46), remainder to Gene (age 18). In determining the value of the life estate, use the multiple given in the IRS valuation table for a person age 18.

In 1990, Gloria purchased as an investment unimproved land for $50,000. In 2011, she sells the land, now worth $200,000, to her church for $50,000. As a result of this transaction, Gloria reports:

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.

Joseph makes a gift of securities (basis of $900,000; fair market value of $600,000) to his son, Earl. As a result of the transfer, Joseph paid a gift tax of $90,000. What is Earl's income tax basis in the securities if the gift occurred in 2011?