Requirements for property to qualify for the federal estate tax marital deduction include which of the following?
1.
The property interest must be includible in the decedent's gross estate.
2.
The property must pass in such manner that it will be includible in the surviving spouse's estate at death unless consumed or given away.
A. 1 only
B. Both 1 and 2
C. Neither 1 nor 2
D. 2 only
All the following are proper actions on the part of a trustee EXCEPT
A. purchasing assets for personal use from the trust at their fair market value with the approval of all beneficiaries
B. investing trust assets in speculative securities in accordance with the provisions of the trust instrument
C. placing cash from the sale of securities in a non-interest bearing checking account for an extended period of time
D. purchasing securities in good faith from a third party just prior to a sharp decrease in their value
The owner of a successful business wishes to sell it to his employee-son so that he can retire. The business is worth substantially more than the owner's basis. The owner and the employee-son have agreed to an installment sale. Which of the following statements concerning this sale is (are) correct?
1.
The present value of any unpaid installments remaining at the owner's death is includible in his estate.
2.
Installment payments are received free of income tax until the seller recovers his basis.
A. Neither 1 nor 2
B. Both 1 and 2
C. 1 only
D. 2 only
A single man with substantial assets and income is supporting his 80-year-old partially senile mother with monthly cash gifts. He is trying to find a practical way to support his mother while at the same time saving federal gift and income taxes without giving up ultimate control of any assets. Which of the following courses of action will best accomplish these objectives?
A. Purchase corporate bonds that pay interest in an amount sufficient for her to support herself and assign the interest payments to her
B. Make her a gift of enough corporate bonds from his portfolio so that she will be able to support herself from the interest payments
C. Make her annual gifts of enough interest income from the tax free municipal bonds in his portfolio so that she will be able to support herself
D. Make her an interest free loan with a principal amount large enough to produce sufficient income for her support when invested in corporate bonds
A father deeded a house as a gift to his daughter in 1990 but retained the right to live in it until his death. He died this year, while still living in the house. The following are relevant facts:
The father bought the property in 1980 for $140,000. The fair market value of the property when the gift was made in 1990 was $170,000. The father filed a timely gift tax return but paid no gift tax because of the applicable credit amount. The fair market value of the property at the father's death was $200,000. The daughter sold the property 3 months after her father's death for $200,000. She had a gain of
A. $200,000
B. $160,000
C. $130,000
D. 0
All the following statements concerning ownership of property in the form of a joint tenancy with right of survivorship are correct EXCEPT:
A. Joint tenants need not be related either by blood or marriage.
B. Either real property or personal property may be the subject of this type of ownership.
C. Upon the death of a joint tenant, his interest in the property passes to his estate or heirs.
D. All joint tenants must have equal interests in the property.
A father deeded a house as a gift to his daughter in 1990 but retained the right to live in it until his death. He died this year while still living in the house. The following are relevant facts: The father bought the property in 1980 for $130,000. The fair market value of the property when the gift was made in 1990 was $150,000. The father filed a timely gift tax return but paid no gift tax because of the applicable credit amount. The fair market value of the property at the father's death was $220,000. The daughter sold the property 3 months after her father's death for $220,000. She had a gain of
A. 0
B. $140,000
C. $220,000
D. $120,000
All the following statements concerning the generation-skipping transfer tax (GSTT) are correct EXCEPT:
A. Each individual has an aggregate $1.5 million exemption against GSTT.
B. Tuition payments made by a grandparent directly to a university for a grandchild's education are exempt from GSTT.
C. The liability for GSTT falls upon the donee regardless of the type of transfer.
D. Direct skip gifts by a grandparent of up to $11,000 can be made to each grandchild without GSTT liability due to an annual exclusion.
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 concerning this estate are:
-Adjusted gross estate $1,600,000
-Fair market value of stock in the
-closely held corporation 700,000
-Funeral expenses 30,000
-Executor's commission 50,000
-
Federal and state death tax 160,000
A.
$240,000
B.
0
C.
$700,000
D.
$ 80,000
All the following are conditions that must be met if an otherwise nonqualified terminable interest is to qualify (as QTIP) for the federal estate tax marital deduction EXCEPT:
A. The surviving spouse must make a qualified disclaimer to all other property in the deceased spouse's estate within 9 months of death.
B. No person can be given the right to direct that the property go to anyone other than the surviving spouse as long as the surviving spouse is alive.
C. The surviving spouse must be given a lifetime right to receive all the property's income at least annually.
D. The deceased spouse's executor must make an irrevocable election to have the property includible in the surviving spouse's gross estate.
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