American College HS-330 Online Practice Questions and Exam Preparation

American College HS-330 Online Questions & Answers

• Question 101:

  A man established and funded an irrevocable trust and named a bank as trustee. All income from the trust is to be paid to his four grandchildren. Which of the following powers retained by the grantor of the trust will cause all or a portion of the trust assets to be includible in his gross estate for federal estate tax purposes?

  1.

  The power to add principal to the trust

  2.

  The power to vary the amounts of trust income paid to each grandchild

  A. Neither 1 nor 2
  B. Both 1 and 2
  C. 1 only
  D. 2 only
  D. 2 only

• Question 102:

  All the following statements concerning transfers at death under a will are correct EXCEPT:

  A. Specific bequests of a decedent's property are satisfied prior to distribution of the decedent's residuary estate.
  B. The most appropriate way to sever a joint tenancy with right of survivorship is for the joint tenant-decedent to make a specific bequest of the property under a will.
  C. It is common for a will to contain a clause that exempts the executor from posting bond.
  D. If during lifetime a decedent disposed of property that was the subject of a specific bequest, ademption occurs.
  B. The most appropriate way to sever a joint tenancy with right of survivorship is for the joint tenant-decedent to make a specific bequest of the property under a will.

• Question 103:

  A man died in February of this year. Last year, when he learned that he had 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 $200,000

  -

  Gift of listed bonds to his wife 300,000

  -

  Gift of a boat to his son 10,000

  -

  Gift of a sports car to his daughter 10,000

  A. $520,000
  B. $290,000
  C. $200,000
  D

• Question 104:

  Examples of terminable interests that are nondeductible for the federal estate tax marital deduction include which of the following?

  1.

  A property interest that would pass to someone else if the surviving spouse remarries

  2.

  A life estate in property that would pass to another person at the death of the surviving spouse

  A. 2 only
  B. Both 1 and 2
  C. Neither 1 nor 2
  D. 1 only
  B. Both 1 and 2

• Question 105:

  A married man died this year leaving a gross estate of $3,200,000. Additional facts concerning his estate are:

  -Administration expenses and debts $ 250,000

  -Marital deduction 1,200,000

  -

  Applicable credit amount (2005) 555,800

  -

  Applicable exclusion amount (2005) 1,500,000

  -

  State death taxes payable 20,400

  B. $123,720
  C. $103,320
  D. $128,280
  C. $103,320

• Question 106:

  Ignoring the annual per-donee exclusion, all the following transfers are gifts for federal gift tax purposes EXCEPT:

  A. An individual gratuitously performs valuable services for the benefit of a close friend.
  B. A grandmother reimburses her grandson for his college tuition costs.
  C. A creditor cancels the promissory note of a friend who recently became unemployed.
  D. A father lends his daughter a large sum of money interest free for a period of 2 years.
  A. An individual gratuitously performs valuable services for the benefit of a close friend.

• Question 107:

  Alan, a widower, is a retired executive with substantial assets. He wishes to provide for the financial security of his two grandchildren since their father, Alan's son, has always managed money poorly. This year Alan would like each grandchild to receive a substantial gift. Which of the following statements concerning the generation-skipping transfer tax (GSTT) on these gifts is (are) correct?

  -

  Federal estate or gift tax will not be imposed if the gift is otherwise subject to the GSTT.

  -

  Assuming no prior gifts, Alan can gift a cumulative total of (not including the annual exclusion) $1.5 million to his grandchildren without the imposition of the GSTT.

  A. 2 only
  B. Neither 1 nor 2
  C. Both 1 and 2
  D. 1 only
  A. 2 only

• Question 108:

  All the following are conditions that must be met if an otherwise nonqualified terminable interest is to qualify (as QTIP) for the federal estate tax marital deduction EXCEPT:

  A. The surviving spouse must make a qualified disclaimer to all other property in the deceased spouse's estate within 9 months of death.
  B. No person can be given the right to direct that the property go to anyone other than the surviving spouse as long as the surviving spouse is alive.
  C. The surviving spouse must be given a lifetime right to receive all the property's income at least annually.
  D. The deceased spouse's executor must make an irrevocable election to have the property includible in the surviving spouse's gross estate.
  A. The surviving spouse must make a qualified disclaimer to all other property in the deceased spouse's estate within 9 months of death.

• Question 109:

  Which of the following statements concerning federal gift, estate, and income taxes is (are) correct:

  1.

  A taxable gift of income-producing property automatically transfers income tax liability to the donee.

  2.

  The value of gifts made within 3 years of death cannot be brought back into the donor's gross estate.

  A. Neither 1 nor 2
  B. 1 only
  C. 2 only
  D. Both 1 and 2
  A. Neither 1 nor 2

• Question 110:

  All of the following statements concerning the use of an irrevocable life insurance trust to solve liquidity problems of the insured's estate are correct EXCEPT:

  A. The grantor is the most appropriate choice for trustee.
  B. The grantor can avoid inclusion of the corpus in his or her gross estate.
  C. The grantor should avoid obtaining incidents of ownership in the policy.
  D. Gift taxes can be avoided for premium contributions made by the grantor.
  A. The grantor is the most appropriate choice for trustee.