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 distributed under the will before the alternate valuation date is valued at the date of death.
B. An annuity included in the gross estate that diminishes with the mere passage of time is includible at the date of death value.
C. Property sold before the alternate valuation date is valued at the alternate valuation date.
D. Property that has increased in value since the date of death may be valued at the date of death if the executor so elects.
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 What is the value of the policy for federal gift tax purposes?
A. $5,400
B. $5,800
C. $5,900
D. $50,000
Which of the following statements concerning the inclusion and valuation of all or part of a commercial annuity in the estate of an annuitant is (are) correct?
1.
A life annuity with a period certain is includible to the extent of the present value of any remaining guaranteed payments.
2.
If the executor elects the alternate valuation date, an annuity is includible at its replacement cost 6 months after death.
A. 2 only
B. Both 1 and 2
C. Neither 1 nor 2
D. 1 only
A man died in February of this year. Last year, when he learned that he had 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 $100,000
-
Gift of listed bonds to his wife 200,000
-
Gift of a boat to his son 10,000
-
Gift of a sports car to his daughter 10,000
A.
$320,000
B.
0
C.
$280,000
D.
$ 90,000
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 that applies only to personal property.
B. The property will be in the probate estate of the first joint tenant to die.
C. One tenant can freely transfer his or her property interest to a third person.
D. It is a form of property ownership available only to married persons.
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.
0
B.
$ 80,000
C.
$700,000
D.
$240,000
Which of the following statements concerning pooled-income funds is (are) correct?
1.
The fund contains commingled donations from many sources.
2.
A decedent donation purchases units in the fund which generate income that is paid at least annually to a charity.
A. 2 only
B. Neither 1 nor 2
C. Both 1 and 2
D. 1 only
Which of the following statements concerning the generation-skipping transfer tax (GSTT) is correct?
A. The GSTT rate applicable to a transfer depends upon the amount of the gift.
B. The lifetime exemption shelters a maximum of $1 million of transfers to grandchildren from GSTT for the current year.
C. Tuition payments made by a grandparent directly to a university for a grandchild's education are exempt from GSTT.
D. The annual exclusion against GSTT shelters gifts by a grandparent to a trust benefitting multiple grandchildren.
A wife owns a $100,000 life insurance policy on her husband's life. She has named her son the revocable beneficiary. Which of the following statements concerning the life insurance is (are) correct?
1.
At the husband's death, the interpolated terminal reserve of the policy is a gift to the son.
2.
The annual increase in the cash value is a gift to the son.
A. 1 only
B. 2 only
C. Both 1 and 2
D. Neither 1 nor 2
A married man is the sole owner of a small business with an estate tax value of $500,000. In addition, he and his wife own an office building as joint tenants with right of survivorship which they purchased five years ago. The building has an estate tax value of $1,500,000. They are considering dissolving the joint tenancy and retitling the building in the name of the husband as sole owner. All the following statements concerning this action are correct EXCEPT:
A. At the husband's death, his heirs would get a fully stepped-up tax basis for the property.
B. At the husband's death, it would be easier to qualify his estate for an IRC Section 303 stock redemption of his business interest.
C. If the husband dies first, the probate costs of his estate could be increased.
D. If the husband dies first and leaves the office building outright to his wife, there would be no federal estate tax attributed to its inclusion in his gross estate.
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