American College HS-330 Online Practice Questions and Exam Preparation

American College HS-330 Online Questions & Answers

• Question 371:

  All the following are proper actions on the part of a trustee EXCEPT

  A. purchasing assets for personal use from the trust at their fair market value with the approval of all beneficiaries
  B. investing trust assets in speculative securities in accordance with the provisions of the trust instrument
  C. placing cash from the sale of securities in a non-interest bearing checking account for an extended period of time
  D. purchasing securities in good faith from a third party just prior to a sharp decrease in their value
  C. placing cash from the sale of securities in a non-interest bearing checking account for an extended period of time

• Question 372:

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

• Question 373:

  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.
  D. Community property loses its identity when a community-property couple moves to a common- law state.

• Question 374:

  All the following statements concerning filing the federal estate tax return are correct EXCEPT:

  A. An automatic one-year extension for filing the estate tax return is granted when the decedent dies overseas.
  B. The estate tax return must be filed within 9 months of death unless an extension is granted by the IRS.
  C. An extension to file the estate tax return must be received and granted by the IRS before the time for filing the return expires.
  D. For persons dying this year, an estate tax return must be filed for gross estates plus adjusted taxable gifts that exceed $1.5 million.
  A. An automatic one-year extension for filing the estate tax return is granted when the decedent dies overseas.

• Question 375:

  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. $240,000
  B. $700,000
  C. $ 80,000
  A. $240,000

• Question 376:

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

• Question 377:

  In addition to substantial probate assets, a married man with two minor children has a $1,000,000 ordinary life insurance policy payable to his estate. He wants to make certain that if he predeceases his wife the death proceeds will be available to provide income for his wife during her lifetime and to provide for their two children after her death. He would like the policy and/or its death proceeds to be as free of federal gift and estate taxes as possible with respect to both him and his wife. Which of the following courses of action would best accomplish these objectives?

  A. Assign the policy to an irrevocable inter vivos trust with five and five powers and designate the trustee to receive the death proceeds
  B. Assign the policy to his wife who will establish a revocable inter vivos trust to receive the death proceeds
  C. Establish a revocable inter vivos trust and designate the trustee to receive death proceeds
  D. Designate his wife as beneficiary and she will establish a testamentary trust in her will to receive the proceeds at her subsequent death
  A. Assign the policy to an irrevocable inter vivos trust with five and five powers and designate the trustee to receive the death proceeds

• Question 378:

  Which of the following statements concerning a simple trust is correct?

  A. Income and principal may be distributed to a qualified charity.
  B. Income is accumulated at the discretion of the trustee.
  C. It receives a special tax deduction for income distributed to its beneficiaries.
  D. It limits the number of permissible beneficiaries.
  C. It receives a special tax deduction for income distributed to its beneficiaries.

• Question 379:

  All the following statements concerning the generation-skipping transfer tax (GSTT) are correct EXCEPT:

  A. Each individual has an aggregate $1.5 million exemption against GSTT.
  B. Tuition payments made by a grandparent directly to a university for a grandchild's education are exempt from GSTT.
  C. The liability for GSTT falls upon the donee regardless of the type of transfer.
  D. Direct skip gifts by a grandparent of up to $11,000 can be made to each grandchild without GSTT liability due to an annual exclusion.
  C. The liability for GSTT falls upon the donee regardless of the type of transfer.

• Question 380:

  When the owner of a closely held business dies, the payment of a portion of the federal estate tax may be deferred for a period of several years if the estate otherwise qualifies under the provisions of IRC Section 6166. Which of the following statements concerning this deferral of federal estate tax is correct?

  A. Under certain circumstances, the estate will forfeit its right to tax deferral, and all the remaining unpaid estate tax will become due and payable immediately.
  B. The interest rate on the deferred tax is determined by the prime rate in effect on the date of death.
  C. To qualify for the tax deferral, the closely held business must represent more than 50 percent of the value of the decedent's adjusted gross estate.
  D. The interest on the unpaid estate tax is payable over the first 10 years, after which the tax plus interest on the balance is payable in equal installments for the last 5 years.
  A. Under certain circumstances, the estate will forfeit its right to tax deferral, and all the remaining unpaid estate tax will become due and payable immediately.