American College American College Certifications HS-330 Questions & Answers

• Question 251:

  All the following items of property will be included in a decedent's gross estate for federal estate tax purposes EXCEPT

  A. the value of property subject to a general power of appointment that the decedent possessed at death

  B. the value of a gratuitous lifetime transfer in which the decedent retained a reversionary interest on the date of death worth more than 5 percent of the value of the property and which the donee must survive the decedent to possess

  C. the value of all gratuitous lifetime transfers of property made within 3 years of death

  D. the value of a gratuitous lifetime transfer in which the decedent retained the right for life to receive the income from the property

  Correct Answer: C

• Question 252:

  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 W

  C. State Z

  D. State Y

  E. State X

  Correct Answer: D

• Question 253:

  All the following statements concerning property ownership by a married couple residing in a community-property state are correct EXCEPT:

  A. Property inherited during the marriage is the separate property of the spouse who inherited it.

  B. Income earned by one spouse becomes community property.

  C. Community property loses its identity when a community-property couple moves to a common- law state.

  D. All property that is not separate property is community property.

  Correct Answer: C

• Question 254:

  In all cases a trustee must invest trust assets in accordance with the

  A. common law standard of the prudent person

  B. stated provisions of the trust instrument

  C. requirements of a state's permissive legal list

  D. requirements of a state's mandatory legal list

  Correct Answer: B

• Question 255:

  The failure of an individual to have a will can result in all the following EXCEPT:

  A. Testamentary gifts to charity cannot be made.

  B. The decedent's state of domicile might receive the property left by the decedent.

  C. Unnecessary death taxes may be imposed.

  D. A surviving spouse receives only his or her elective share.

  Correct Answer: D

• Question 256:

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

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

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

  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 257:

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

  A. 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.

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

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

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

  Correct Answer: A

• Question 258:

  Which of the following types of partial interests in property may be allowed a charitable deduction for estate tax purposes?

  1.

  A remainder interest in the donor vacation home

  2.

  A testamentary gift of a percentage of a decedent entire interest in property held in trust

  A. Both 1 and 2

  B. Neither 1 nor 2

  C. 1 only

  D. 2 only

  Correct Answer: C

• Question 259:

  Important factors in assessing liquidity needs in estate planning include which of the following?

  1.

  The types of assets that comprise the estate

  2.

  The date of drafting the will

  A. Neither 1 nor 2

  B. 2 only

  C. Both 1 and 2

  D. 1 only

  Correct Answer: D

• Question 260:

  Income earned but unpaid at the time of a decedent's death is deemed to be income in respect of a decedent (IRD). Which of the following statements concerning IRD is (are) correct?

  1.

  The income is taxable to the person or entity receiving it.

  2.

  The present value of the income is includible in the decedent's gross estate.

  A. 1 only

  B. 2 only

  C. Neither 1 nor 2

  D. Both 1 and 2

  Correct Answer: D