American College American College Certifications HS330 Questions & Answers

• Question 241:

  All the following statements concerning wills are correct EXCEPT:

  A. A testator may lose the capacity to revoke a will prior to death.

  B. A codicil is a valid modification of a will.

  C. Once a person is named as an executor in a will, he or she is required to serve.

  D. In most states a surviving spouse can elect against a will that completely disinherits him or her.

  Correct Answer: C

• Question 242:

  Which of the following statements concerning charitable remainder unitrusts is correct?

  A. A fixed percentage of not less than 10 percent of the net fair market value of the trust assets is paid to the noncharitable beneficiaries.

  B. The remainder interest is paid to the qualified charity after a term of years not greater than 15 years.

  C. The net fair market value of the trust assets are revalued annually.

  D. No further contributions may be made to a unitrust after the initial payment.

  Correct Answer: C

• Question 243:

  All the following statements concerning a complex trust are correct EXCEPT:

  A. The trustee may make distributions of principal to trust beneficiaries.

  B. Beneficiaries must receive all distributable net income in the year received by the trust.

  C. Beneficiaries are taxed on their share of distributable net income when received by them.

  D. A complex trust may make gifts to charity.

  Correct Answer: B

• Question 244:

  Which of the following statements concerning the valuation of intangible personal property in the gross estate of a decedent is correct?

  A. When a minority stockholder in a closely held corporation dies, his stock is valued on the basis of the "blockage" rule.

  B. Certain U.S. Treasury bonds that are used to pay federal estate taxes at par are valued at their market price on the date of death of the owner.

  C. Valuing closely held stock requires the consideration of several factors outlined by IRS rulings.

  D. If there were no trades of a listed common stock on the date of the stockholder's death, the stock's value is based on its average daily price for the previous month prior to the shareholder's death.

  Correct Answer: C

• Question 245:

  A person dying without a will loses all the following rights EXCEPT the right to

  A. take maximum advantage of the marital deduction

  B. have assets pass to heirs

  C. give property to a charity

  D. name the person to settle the estate

  Correct Answer: B

• Question 246:

  All the following will be brought back into the donor's gross estate for federal estate tax purposes EXCEPT

  A. a gratuitous transfer of real property to a revocable inter vivos trust

  B. an outright, gratuitous transfer of real property in contemplation of death

  C. a gratuitous transfer of real property with a reserved right to use and enjoy it for life

  D. the gift taxes paid last year on a gratuitous transfer of real property

  Correct Answer: B

• Question 247:

  All the following will be brought back into the donor's gross estate for federal estate tax purposes EXCEPT

  A. a gratuitous transfer of real property to a revocable inter vivos trust

  B. an outright, gratuitous transfer of real property in contemplation of death

  C. the gift taxes paid last year on a gratuitous transfer of real property

  D. a gratuitous transfer of real property with a reserved right to use and enjoy it for life

  Correct Answer: B

• Question 248:

  A father plans to create a trust for the benefit of his 22-year-old son and wishes to take advantage of the gift tax annual exclusion. He has named a bank as trustee. Which of the following trust provisions would cause the gifts to be ineligible to qualify for the gift tax annual exclusion?

  1.

  The trust income is to be paid to the son or accumulated at the discretion of the trustee.

  2.

  The income is to be accumulated until the son reaches age 32 when all accumulated income and principal are to be distributed to him.

  A. 2 only

  B. 1 only

  C. Neither 1 nor 2

  D. Both 1 and 2

  Correct Answer: D

• Question 249:

  Which of the following is (are) a permissible deduction from a decedent's gross estate to determine the decedent's adjusted gross estate?

  1.

  Expenses incurred for the benefit of individual heirs.

  2.

  Expenses incurred in the collection of estate assets.

  A. Neither 1 nor 2

  B. 2 only

  C. 1 only

  D. Both 1 and 2

  Correct Answer: B

• Question 250:

  To determine whether a taxable gift has been made, the IRS focuses on all the following factors EXCEPT:

  A. Was the transferred property real property or personal property?

  B. Was the value of the gift property in excess of the annual per-donee exclusion?

  C. Did the donor absolutely, irrevocably, and currently divest himself of dominion and control over the property?

  D. Was the property transferred for less than an adequate and full consideration in money or money's worth?

  Correct Answer: A