On the advice of their attorney and accountant, Betsy and John have decided to make substantial transfers. They would like to pass most of their considerable wealth to their grandchildren. Which of the following statements concerning gifts made to their grandchildren is correct?
A. Betsy and John may elect to split any GSTT transfers to the grandchildren.
B. The value of Betsy and John's GSTT exemption amounts are slightly increased when used at death rather than during lifetime.
C. The GSTT annual exclusion may be utilized by Betsy and John for each grandchild during lifetime and at death.
D. The GSTT annual exclusion is unavailable for years in which Betsy and John make tuition gifts for the grandchildren.
Tax benefits of making lifetime gifts in excess of the gift tax annual exclusion include which of the following?
1.
The gift tax paid on a gift made more than 3 years prior to the death of the donor is not brought back into the donor's estate.
2.
Such gifts make use of the lifetime applicable credit amount against gift taxes which is wasted if the property is retained until the donor's death.
A. 1 only
B. Both 1 and 2
C. 2 only
D. Neither 1 nor 2
All the following statements concerning installment sale tax treatment are correct EXCEPT:
A. The seller must pay income tax on the interest portion of each installment.
B. If the seller has a gain, the basis portion of each installment is received tax free.
C. Installments due after the seller's death are excludible from the seller's gross estate.
D. The entire purchase price may be fully paid in any one taxable year other than the year in which the property is sold.
Which of the following actions on the part of a trustee is a breach of his duties?
A. Purchasing securities in good faith from a third party just prior to a sharp decrease in their value
B. Investing all trust assets in securities that favor the income beneficiaries to the detriment of remainderpersons
C. Placing cash from the sale of securities in a high yield money market fund pending a decision to invest the funds elsewhere
D. Purchasing assets for personal use from the trust at their fair market value with the approval of all beneficiaries
The following are facts concerning a decedent's estate:
-Taxable estate $1,800,000
-Pre-1977 taxable gifts 100,000
-
Post-1976 adjusted taxable gifts 150,000
-
Post-1976 gifts made to a qualified charity 200,000
A.
$2,150,000
B.
$1,650,000
C.
$1,800,000
D.
$1,950,000
The failure of an individual to have a will can result in which of the following?
1.
The state will determine the disposition of the individual's probate estate.
2.
The decedent's preference for a personal representative, guardian, and other fiduciary roles may be ignored.
A. Neither 1 nor 2
B. 2 only
C. 1 only
D. Both 1 and 2
Tax benefits of making lifetime gifts in excess of the gift tax annual exclusion include all the following EXCEPT:
A. Appreciation in the value of a gift of real property after the date of the gift increases the donor's federal estate tax liability.
B. Gift taxes are payable at the same tax rate as estate taxes.
C. Income taxes can be saved if a high-income donor gives income-producing property to a low- income donee.
D. 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.
A father and son have been farming land owned by the father for the past 12 years. Just prior to his death, the father was offered $900,000 for his farm because of its possible use as a shopping center. The son would like to continue to farm the land if it can be included in his father's estate at its current use value. Additional facts are:
1.Average annual gross rentals from nearby farms of similar acreage are $36,000.
2.Average annual state and local real estate taxes on the farm are $4,000.
3.The interest rate for loans from the Federal Land Bank is 8 percent. For federal estate tax purposes, the farm method valuation formula would result in a current use value for the farm of
A. $600,000
B. $300,000
C. $500,000
D. $400,000
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 available only to married persons.
B. It is a form of property ownership that applies only to personal property.
C. One tenant can freely transfer his or her property interest to a third person.
D. The property will be in the probate estate of the first joint tenant to die.
An executor elects to value the assets of the estate at the alternative valuation date 6 months after death. Which of the following statements concerning the estate tax value of assets included in this estate is correct?
A. Property sold before the alternate valuation date is valued at the alternate valuation date.
B. Property that has increased in value since the date of death may be valued at the date of death if the executor so elects.
C. Property distributed under the will before the alternate valuation date is valued at the date of death.
D. An annuity included in the gross estate that diminishes with the mere passage of time is includible at the date of death value.
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