A father wants to accumulate funds for his 12-year-old son's college education. On the advice of his attorney, the father establishes an IRC Section 2503(c) trust and funds it with annual gifts. All the following statements concerning this arrangement are correct EXCEPT:
A. Any accumulated income and all trust principal must be available for distribution to the son when he attains age 21.
B. The father's annual gift tax exclusion must be reduced by any amount used to pay college tuition costs.
C. The trust must be irrevocable.
D. In the event of the son's death prior to age 21, trust assets must either be payable to the son's estate or be subject to a general power of appointment held by the son.
A father is considering giving his daughter a gift. For tax planning purposes, the father should give his daughter which of the following?
A. A bond that cost him $25,000 and is now worth $10,000
B. Securities that cost him $10,000, its present fair market value, but which has a substantial potential for appreciation
C. Raw land that cost him $1,000 and which now has a fair market value of $14,000
D. Real estate that cost him $30,000 and is now worth $110,000, subject to a $100,000 mortgage
Believing that his death was imminent, a widower gave his son some real estate two years ago, and filed a timely gift tax return. The widower died on January 1st of this year. Additional facts are: Widower's basis in the real estate $200,000 Value of real estate when gifted 510,000 Value of real estate on date of death 1,000,000 Amount of gift tax paid by widower 159,500
Assuming the widower made no additional gifts to his son, all the following statements concerning this situation are correct EXCEPT:
A. The widower recognized no capital gain for income tax purposes at the time the gift was made.
B. The gift of the real estate is included in the calculation of the widower's federal estate tax as an adjusted taxable gift.
C. The son's income tax basis in the real estate is $1,000,000.
D. The gift tax paid is brought back into the widower's gross estate at $159,500.
Which of the following statements concerning property is (are) correct?
1.
A mortgage on real estate is real property.
2.
A tree growing on land is real property.
A. 2 only
B. 1 only
C. Neither 1 nor 2
D. Both 1 and 2
All the following statements concerning the ownership of real property as joint tenants with right of survivorship are correct EXCEPT:
A. If three sisters inherited property as joint tenants with right of survivorship, the entire value of the property will be in the estate of the first sister to die.
B. If the joint tenants are husband and wife, because this is a qualified joint interest, one half the value of the property will be in the estate of the first spouse to die regardless of which spouse contributed to the purchase price.
C. If the joint tenants are two brothers and each contributed one half the property's purchase price, only one half the property's value will be in the estate of the first brother to die if his executor proves that the other brother contributed half of the purchase price.
D. If the joint tenants are brother and sister, no portion of the value of the property will be in the sister's estate if she dies first provided her executor proves that the brother contributed all the funds.
An individual who is a resident of State W is also the sole proprietor of a business located in State
A. He owns real property located in State X that is used by the proprietorship. While on vacation in State Y, the individual meets an untimely death. Under the terms of his will, his entire estate is bequeathed to a resident of State Z. Which state will tax the real property used by the proprietorship?
B. State X
C. State W
D. State Y
E. State Z
All the following statements concerning a federal estate tax deduction for a bequest or gift to a qualified charity are correct EXCEPT:
A. A life insurance policy that was assigned to a charity as a gift less than 3 years prior to the insured's death qualifies for a charitable deduction.
B. The amount of a charitable deduction is reduced by any taxes and administrative expenses chargeable against the bequest.
C. The amount of a charitable deduction may not exceed 50 percent of a decedent's adjusted gross estate.
D. An estate may deduct the value of the remainder interest in a charitable remainder trust.
All the following statements concerning a federal estate tax deduction for a bequest or gift to a qualified charity are correct EXCEPT:
A. The amount of a charitable deduction may not exceed 50 percent of a decedent's adjusted gross estate.
B. An estate may deduct the value of the remainder interest in a charitable remainder trust.
C. A life insurance policy that was assigned to a charity as a gift less than 3 years prior to the insured's death qualifies for a charitable deduction.
D. The amount of a charitable deduction is reduced by any taxes and administrative expenses chargeable against the bequest.
Which of the following statements concerning the imposition of state death taxes on property owned by a decedent is (are) correct?
1.
Real estate must be taxed in the state where the decedent was domiciled.
2.
Intangible personal property is generally taxed in the state where the decedent was domiciled.
A. 2 only
B. Both 1 and 2
C. 1 only
D. Neither 1 nor 2
A person dying without a will loses all the following rights EXCEPT the right to
A. give property to a charity
B. take maximum advantage of the marital deduction
C. name the person to settle the estate
D. have assets pass to heirs
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