Mr. Barlow died early this year. Under the terms of his will he left all his real estate and tangible personal property to his son. All the remainder of his probate estate was left to his wife, Mrs. Barlow. The following is a list of Mr. Barlow's probate assets and their fair market values at the time of his death:
-Commercial real estate $150,000
-Furniture and fixtures 75,000
-Listed common stock 300,000
-
Other securities 200,000
A.
$825,000
B.
$500,000
C.
$400,000
D.
$600,000
A father died leaving his property equally to his wealthy son and his poor daughter. The son wishes to disclaim his share of the inheritance so that it will pass to his sister without his incurring any gift tax liability. In this situation, all the following acts on the part of the son are required EXCEPT:
A. He must not have received any part of his inheritance or any income from it prior to his refusal to accept it.
B. His refusal to accept the inheritance must be received by the executor of his father's estate within 9 months of his father's death.
C. His refusal to accept the inheritance must be in writing.
D. His refusal to accept the inheritance must direct specifically that his sister is to receive it instead.
Which of the following statements concerning a grantor-retained annuity trust (GRAT) is correct?
A. The transfer of property to the trust becomes a completed gift for gift tax purposes only at the termination of the grantor's retained interest term.
B. The trust is used as a device for shifting income tax on the current trust income to the remainderperson(s).
C. If the grantor dies before the retained interest term ends, the estate tax benefits are reduced.
D. The grantor retains control of the trust property until revocation or death.
Income earned but unpaid at the time of a decedent's death is deemed to be income in respect of a decedent (IRD). All the following statements concerning IRD are correct EXCEPT:
A. The income must be reported on the decedent's final federal income tax return.
B. IRD includes sales commissions earned prior to the decedent's death and paid to the estate according to the intestacy laws.
C. The income is taxable to the person or entity receiving it.
D. The income may be included on both the estate tax return and the estate income tax return with a corresponding deduction.
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. 1 only
B. Both 1 and 2
C. Neither 1 nor 2
D. 2 only
Which of the following statements concerning state death tax exemptions and tax rates for classes of estate beneficiaries is (are) correct?
1.
Exemptions are determined by the closeness of the beneficiary's blood relationship to the decedent.
2.
Closest relatives receive the lowest tax rates and lowest exemption amounts.
A. 1 only
B. Neither 1 nor 2
C. Both 1 and 2
D. 2 only
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. Neither 1 nor 2
B. 1 only
C. 2 only
D. Both 1 and 2
All the following statements concerning property ownership by a married couple residing in a community-property state are correct EXCEPT:
A. Income earned by one spouse becomes community property.
B. All property that is not separate property is community property.
C. Property inherited during the marriage is the separate property of the spouse who inherited it.
D. Community property loses its identity when a community-property couple moves to a common- law state.
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 distribution to a grandchild from a sprinkle trust created by a grandparent to benefit both skip and non-skip beneficiaries.
C. A termination of a trust at the death of the nonskip life income beneficiary with the remainder distributed solely to skip persons.
D. A direct cash gift of $50,000 from a grandparent to his grandchild if such grandchild's parents are still alive.
If a grantor establishes an irrevocable trust, the income of the trust will be taxed to the grantor if it is used to pay premiums for life insurance on the life of
A. the father of the grantor
B. a child of the grantor
C. the spouse of the grantor
D. a grandchild of the grantor
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