American College American College Certification HS-330 Questions & Answers

• Question 31:

  Nontax benefits of lifetime gifts include all the following EXCEPT to

  A. reduce probate and administrative costs

  B. provide for the education of the donee

  C. avoid claims of creditors evidenced by liens

  D. obtain privacy that is not possible to obtain through testamentary transfers

  Correct Answer: C

• Question 32:

  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. Both 1 and 2

  B. Neither 1 nor 2

  C. 1 only

  D. 2 only

  Correct Answer: D

• Question 33:

  Which of the following statements concerning estates and trusts is (are) correct?

  1.

  Both estates and trusts come into being by operation of law.

  2.

  The personal representative of an estate and the trustee have similar fiduciary responsibilities.

  A. Both 1 and 2

  B. 2 only

  C. Neither 1 nor 2

  D. 1 only

  Correct Answer: B

• Question 34:

  Under the terms of his will, a man left his residuary estate to a testamentary trust for the benefit of his wife. Which of the following powers with respect to the trust will cause all the trust principal to be includible in the gross estate of the widow for federal estate tax purposes?

  A. The power of the widow to direct the trustee to use trust assets to pay her personal debts

  B. The power of the trustee in its sole discretion to distribute trust assets to the widow for any reason satisfactory to the trustee

  C. The testamentary limited or special power of the widow to direct the trustee to distribute trust assets to her heirs.

  D. The power of the widow each year to direct the trustee to pay her the greater of 5 percent of the trust principal or $5,000

  Correct Answer: A

• Question 35:

  For estate tax purposes which of the following is (are) a form of charitable gifts that may qualify for the charitable deduction?

  1.

  Partial interests

  2.

  Guaranteed annuity interests

  A. 2 only

  B. Neither 1 nor 2

  C. 1 only

  D. Both 1 and 2

  Correct Answer: D

• Question 36:

  A taxable gift has been made in which of the following situations?

  1.

  A father manages his disabled son's business for a year without compensation since a replacement manager would have cost $25,000.

  2.

  A father verbally promises his 21-year-old daughter that he will give her his antique Mercedes when she graduates from college next year.

  A. Neither 1 nor 2

  B. Both 1 and 2

  C. 1 only

  D. 2 only

  Correct Answer: A

• Question 37:

  All the following powers held by the grantor of an irrevocable trust will cause the trust assets to be brought back into the estate of the grantor EXCEPT the power to

  A. designate who shall enjoy the trust income

  B. add principal to the trust

  C. change the trust remainderpersons

  D. terminate the trust

  Correct Answer: B

• Question 38:

  Which of the following statements concerning the gift or estate tax charitable deduction is (are) correct?

  1.

  A donor is denied a charitable deduction for property that passes to a qualified charity as the result of a qualified disclaimer if the donor original transfer was to a noncharitable donee.

  2.

  A decedent-spouse estate may obtain both marital and charitable deductions for interests contributed to a charitable remainder trust when the surviving spouse is the only noncharitable income beneficiary for life.

  A. Both 1 and 2

  B. 1 only

  C. 2 only

  D. Neither 1 nor 2

  Correct Answer: C

• Question 39:

  The personal representative of a decedent has the duty to file all the following tax returns EXCEPT

  A. the federal estate tax return

  B. the decedent's final income tax return

  C. the estate's income tax return

  D. the surviving spouse's income tax return for the year of death

  Correct Answer: D

• Question 40:

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

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

  Correct Answer: D