HS330 Online Practice Questions and Answers

All the following statements concerning real property ownership by married couples as joint tenants with right of survivorship are correct EXCEPT:

A. Jointly held property between spouses does not pass through the probate estate of the first spouse to die.

B. In common-law states the total value of the property receives a stepped-up tax basis in the estate of the first spouse to die.

C. All benefits of ownership remain available to the surviving spouse without interruption during the administration of the deceased spouse's estate.

D. The deceased spouse's interest in the property qualifies for the marital deduction since it passes outright to the surviving spouse.

The Decedent, T, died this year. The facts concerning T estate are:

-Gross estate $2,700,000

-Marital deduction 900,000

-Charitable deduction 110,000

-Gifts made after 1976 130,000

-

State death taxes payable 165,000

A.

$1,395,000

B.

$1,285,000

C.

$1,655,000

D.

$1,525,000

A taxable gift has been made in which of the following situations?

1.

A father manages his disabled son's business for a year without compensation since a replacement manager would have cost $25,000.

2.

A father verbally promises his 21-year-old daughter that he will give her his antique Mercedes when she graduates from college next year.

A. 2 only

B. Neither 1 nor 2

C. Both 1 and 2

D. 1 only

Which of the following life insurance settlement options will qualify for the federal estate tax marital deduction?

1.

Proceeds left to the surviving spouse under the interest option, with interest payable to the surviving spouse who has the unrestricted right to withdraw proceeds and with any proceeds not withdrawn payable equally to her children per stirpes

2.

Proceeds left to the surviving spouse under an installment option, with any installments remaining at her death to be commuted and paid to her estate

A. Both 1 and 2

B. Neither 1 nor 2

C. 2 only

D. 1 only

Which of the following areas of consideration present common ethical issues for the estate planner?

A. Contractuality

B. Conformity

C. Conservancy

D. Cooperation

Which of the following is an example of a taxable gift for federal gift tax purposes?

A. The parents of a married son permit their son and his family to use a summer cottage that rents for $3,000 per month on a rent-free basis.

B. A father gives his 19-year-old daughter a note promising to give her his Rolls Royce when she reaches the age of 21.

C. Instead of parents paying an outside executive $60,000, a son runs their business for 8 months without charging a fee.

D. A father cancels a $50,000 note his daughter gave him when he made a loan to her 2 years ago.

A married man is the sole owner of a small business with an estate tax value of $500,000. In addition, he and his wife own an office building as joint tenants with right of survivorship which they purchased five years ago. The building has an estate tax value of $1,500,000. They are considering dissolving the joint tenancy and retitling the building in the name of the husband as sole owner. Which of the following statements concerning this action is (are) correct?

1.

If the husband dies first, it would be easier to qualify his estate for a Section 303 redemption of his business interest.

2.

If the husband dies first, the probate costs of his estate could be increased.

A. Neither 1 nor 2

B. 1 only

C. Both 1 and 2

D. 2 only

A man died in February of this year. Last year, when he learned that he had terminal illness, he immediately made the following gifts and filed the required gift tax return: Fair Market Value Gift of listed stock to a

-qualified charity $200,000

-

Gift of listed bonds to his wife 300,000

-

Gift of a boat to his son 10,000

-

Gift of a sports car to his daughter 10,000

A.

$200,000

B.

0

C.

$290,000

D.

$520,000

A father died leaving his property equally to his wealthy son and his poor daughter. The son wishes to disclaim his share of the inheritance so that it will pass to his sister without his incurring any gift tax liability. In this situation, all the following acts on the part of the son are required EXCEPT:

A. His refusal to accept the inheritance must be received by the executor of his father's estate within 9 months of his father's death.

B. His refusal to accept the inheritance must direct specifically that his sister is to receive it instead.

C. His refusal to accept the inheritance must be in writing.

D. He must not have received any part of his inheritance or any income from it prior to his refusal to accept it.

The decedent, D, died this year. The facts concerning D estate are:

-Gross estate $3,400,000

-Marital deduction 0

-Charitable deduction 600,000

-Funeral and administration expenses 80,000

-Gifts made after 1976 170,000

-

State death taxes payable 192,000

A.

$2,720,000

B.

$2,358,000

C.

$2,138,000

D.

$2,528,000