Transactions involving a taxable gift include which of the following?
1.
A father bought real estate, paid the entire $180,000 purchase price, and titled it jointly with his son with right of survivorship.
2.
A father deposited $50,000 in a bank account titled jointly with his daughter with right of survivorship and died before any funds were withdrawn from the account.
A. 1 only
B. 2 only
C. Neither 1 nor 2
D. Both 1 and 2
Which of the following statements concerning the inclusion in a decedent-employee's gross estate of a lump-sum distribution from a qualified retirement plan to a beneficiary other than the employee's estate is (are) correct?
1.
Lump-sum distributions of payments attributable to the employer's contributions are excluded from the gross estate.
2.
Lump-sum distributions of payments attributable to the decedent-employee's contributions are excluded from the gross estate.
A. Both 1 and 2
B. 1 only
C. 2 only
D. Neither 1 nor 2
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interest payable to the surviving spouse who has the unrestricted right to withdraw proceeds and with any proceeds not withdrawn payable equally to her children per stirpes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
A man is planning to establish and fund an irrevocable trust for the benefit of his two sons, ages 19 and 22, and plans to give the trustee power to sprinkle trust income. From the standpoint of providing federal income, gift, and estate tax savings, which of the following would be a suitable trustee?
1.
The grantor of the trust
2.
The grantor's 22-year-old son
A. Neither 1 nor 2
B. 1 only
C. Both 1 and 2
D. 2 only
Which of the following factors is (are) used to make a choice between having an entity-purchase or a cross-purchase partnership buy-sell agreement?
1.
The number of partners
2.
The divergence of the partners' business knowledge and skills
A. Both 1 and 2
B. 2 only
C. Neither 1 nor 2
D. 1 only
On January 1, 2004 a father gave his daughter a $50,000 straight (ordinary) life insurance policy on his life. Premiums are paid annually. The pertinent facts about the policy are:
Date of issue: July 1, 1992
-Premium paid on July 1, 2003 $800
-
Terminal reserve on July 1, 2003 5,000
-
Terminal reserve on July 1, 2004 6,000
A.
$5,800
B.
$50,000
C.
$5,900
D.
$5,400
Tax benefits of making lifetime gifts in excess of the gift tax annual exclusion include all the following EXCEPT:
A. Gift taxes are payable at the same tax rate as estate taxes.
B. Income taxes can be saved if a high-income donor gives income-producing property to a low- income donee.
C. The gift tax paid on a gift made more than 3 years prior to the death of the donor avoids inclusion the donor's gross estate.
D. Appreciation in the value of a gift of real property after the date of the gift increases the donor's federal estate tax liability.
A man died in February of this year. Last year, when he learned that he has a 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 $150,000
-
Gift of listed bonds to his wife 200,000
-
Gift of a boat to his son 5,000
-
Gift of a sports car to his daughter 5,000
A.
$190,000
B.
$360,000
C.
$150,000
D.
0
All the following transfers are subject to the generation-skipping transfer tax (GSTT) EXCEPT:
A. A direct cash payment of $28,000 from a grandparent to a private prep school to cover the tuition costs for her grandchild.
B. A termination of a trust at the death of the nonskip life income beneficiary with the remainder distributed solely to skip persons.
C. A distribution to a grandchild from a sprinkle trust created by a grandparent to benefit both skip and non-skip beneficiaries.
D. A direct cash gift of $50,000 from a grandparent to his grandchild if such grandchild's parents are still alive.
Which of the following statements concerning wills is (are) correct?
1.
A will should be reviewed periodically to assure that the property owner's most recent intentions are honored at death.
2.
Once signed, a will's provisions may not be changed without the consent of all the beneficiaries under the will.
A. Both 1 and 2
B. 1 only
C. 2 only
D. Neither 1 nor 2
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