American College American College Certifications HS-330 Questions & Answers

• Question 161:

  Which of the following types of real property ownership will be deemed to be a tenancy in common?

  A. Two brothers are equal partners in a general partnership that owns a piece of real property used in the partnership business.

  B. Two brothers own equal amounts of all the common stock in a corporation, the only asset of which is real property.

  C. Two brothers own equal fractional interests in a piece of real property and at the death of one of the brothers the survivor will own the entire piece of property.

  D. Two brothers own equal undivided interests in a piece of real property, with each brother being able to divest himself of his interest by sale, gift, or will.

  Correct Answer: D

• Question 162:

  All the following statements concerning a grantor-retained annuity trust (GRAT) or a grantor- retained unitrust (GRUT) are correct EXCEPT:

  A. A grantor receives an annual payout from a GRUT that is based on the value that the trust grows or contracts to each year.

  B. After the initial transfer to a GRAT, the grantor is prohibited from making additional contributions to the trust.

  C. For gift tax purposes a grantor's retained interest in these trusts is valued at zero.

  D. Post-transfer appreciation of property transferred to these trusts is excluded from the grantor's gross estate.

  Correct Answer: C

• Question 163:

  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interest payable to the surviving spouse who has the unrestricted right to withdraw proceeds and with any proceeds not withdrawn payable equally to her children per stirpes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. 2 only

  C. Neither 1 nor 2

  D. 1 only

  Correct Answer: A

• Question 164:

  Which of the following statements concerning ownership of property under a tenancy by the entirety is correct?

  A. It is a form of property ownership that applies only to personal property.

  B. The property will be in the probate estate of the first joint tenant to die.

  C. It is a form of property ownership available only to married persons.

  D. One tenant can freely transfer his or her property interest to a third person.

  Correct Answer: C

• Question 165:

  A man established and funded an irrevocable trust and named a bank as trustee. All income from the trust is to be paid to his four grandchildren. Which of the following powers retained by the grantor of the trust will cause all or a portion of the trust assets to be includible in his gross estate for federal estate tax purposes?

  1.

  The power to add principal to the trust

  2.

  The power to vary the amounts of trust income paid to each grandchild

  A. Neither 1 nor 2

  B. 1 only

  C. 2 only

  D. Both 1 and 2

  Correct Answer: C

• Question 166:

  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

  A.

  The gift of the real estate is included in the calculation of the widower's federal estate tax as an adjusted taxable gift.

  B.

  The gift tax paid is brought back into the widower's gross estate at $159,500.

  C.

  The widower recognized no capital gain for income tax purposes at the time the gift was made.

  D.

  The son's income tax basis in the real estate is $1,000,000.

  Correct Answer: D

• Question 167:

  The personal representative of a decedent has the duty to file which of the following income tax returns?

  1.

  The decedent's final income tax return

  2.

  The estate's income tax return

  A. 2 only

  B. 1 only

  C. Both 1 and 2

  D. Neither 1 nor 2

  Correct Answer: C

• Question 168:

  All the following statements concerning transfers at death under a will are correct EXCEPT:

  A. Specific bequests of a decedent's property are satisfied prior to distribution of the decedent's residuary estate.

  B. If during lifetime a decedent disposed of property that was the subject of a specific bequest, ademption occurs.

  C. It is common for a will to contain a clause that exempts the executor from posting bond.

  D. The most appropriate way to sever a joint tenancy with right of survivorship is for the joint tenant-decedent to make a specific bequest of the property under a will.

  Correct Answer: D

• Question 169:

  Among the assets in a decedent's gross estate is stock in a closely held corporation that was left to a nephew. The interest passing to the nephew is required to bear the burden of all estate taxes and expenses. The relevant facts about this estate are:

  -Adjusted gross estate $1,200,000

  -Fair market value of stock in the

  -closely held corporation 500,000

  -Administration and funeral expenses 25,000

  -State inheritance taxes 40,000

  -

  Federal estate taxes 160,000

  A.

  $225,000

  B.

  $500,000

  C.

  0

  D.

  $ 65,000

  Correct Answer: A

• Question 170:

  Which of the following statements concerning antenuptial agreements is (are) correct?

  1.

  They are frequently used prior to second marriages.

  2.

  They can affect a surviving spouse's right to receive an intestate share of a deceased spouse's estate.

  A. Neither 1 nor 2

  B. 2 only

  C. 1 only

  D. Both 1 and 2

  Correct Answer: D