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Which of the following is deductible in arriving at the amount of the taxable estate?


A) expenses incurred in administering the estate
B) casualty losses that occurred while administering the estate
C) charitable contributions
D) All of the above are deductible.

E) None of the above
F) A) and B)

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Four years ago, Roper transferred to his son ownership of a $100,000 life insurance policy that Roper purchased on his own life in 2000.The cash value of the policy on the transfer date was $25,000.Roper died on March 1st of this year.The amount included in Roper's gross estate due to the life insurance policy is


A) $0.
B) $25,000.
C) $35,000.
D) $100,000.

E) A) and C)
F) B) and C)

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In 2001, Alejandro buys an annuity for $100,000 that will pay Alejandro an annual amount for life with survivor benefits to his wife.When Alejandro dies in the current year, a comparable contract would have cost $81,000.What amount is included in Alejandro's gross estate?


A) $0
B) $81,000
C) $100,000
D) $181,000

E) A) and C)
F) C) and D)

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Identify which of the following statements is true.


A) Reversionary interests of less than 5% are includible in the gross estate.
B) A reversionary interest means a chance exists that the property may pass back to the transferor under the terms of the transfer.
C) If a reversionary interest exceeds 3% of the property's value, the amount that is included in the estate is not the value of the reversionary interest, but rather the date-of-death value of the gifted property less the value of intervening life estates.
D) All of the above are false.

E) C) and D)
F) A) and C)

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Michael Moriarty, a widower, is quite elderly and is beginning to do some estate planning.His goal is to reduce his transfer taxes.He is considering purchasing land with a high potential for appreciation and owning it with his grandson as joint tenants with rights of survivorship.Michael would provide all of the consideration, estimated to be about 11.5 million.What tax issues should Michael Moriarty consider with respect to the purchase of the land?

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• Does Michael make a gift when he purch...

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Ted died on May 3.At the time of his death, he owned a beach house valued at $250,000.On June 10, the beach house was completely destroyed by a hurricane and there was no insurance coverage.If the executor elects to use the alternate valuation date, the executor will


A) include the beach house in the gross estate at $250,000.
B) take a casualty loss of $250,000 on the estate tax return.
C) take a casualty loss of $250,000 on the estate's income tax return.
D) include the beach house in the gross estate at $0.

E) C) and D)
F) None of the above

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Which of the following is not a credit for purposes of computing the federal estate tax liability?


A) credit for gift tax paid on pre-1977 gifts
B) credit for estate taxes paid on certain prior transfers
C) a credit for foreign death taxes
D) All of the above are credits for the federal estate tax.

E) A) and C)
F) All of the above

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Ray died on March 4.His estate includes some stock and a parcel of land.The stock is still owned by the estate on September 4, but the land is sold on August 30.If Ray's executor elects the alternate valuation date, what values would be used for estate tax purposes for the stock and the land?

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Stock value on Septe...

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In February of the current year, Tom dies.Two years and nine months before the date of death, Tom made a gift of stock valued at $2 million.Gift taxes paid on the transfer by Tom were $435,000 after reduction for a $345,800 unified credit ($780,800 - $345,800) .At the time of his death, the gifted stock was valued at $2.3 million.The amount included in Tom's gross estate from this transfer is


A) $2,000,000.
B) $2,300,000.
C) $435,000.
D) none of the above

E) A) and B)
F) A) and C)

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When computing the federal estate tax liability in 2013, the maximum amount for a taxable estate (not tentative tax) that the unified credit for the current year will eliminate all of the tax is


A) $555,800.
B) $780,800.
C) $5,250,000.
D) $2,000,000.

E) B) and C)
F) None of the above

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Identify which of the following statements is true.


A) The unified credit is the only credit common to both the gift and estate tax computation.
B) For estate tax purposes, publicly traded stocks are valued at their closing price on the date of death.
C) Stocks traded on a stock exchange are valued at the closing price for the date of death unless the alternate valuation date is elected.
D) All of the above are false.

E) A) and B)
F) A) and C)

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Denise died April 1 and owned several bonds that paid interest March 31 and September 30.Also, she owned stock that paid dividends quarterly on March 31, June 30, September 30, and December 31.Denise's estate received the interest and dividends on the payment dates.What should be included in Denise's gross estate?


A) all interest and dividends received in the year of death
B) only interest and dividends received prior to the date of death
C) only interest and dividends received after the date of death
D) none of the interest and dividends received

E) A) and D)
F) B) and D)

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On March 1, Bart transfers ownership of a $700,000 life insurance policy on his life that he purchased in 2011.How long must Bart live to avoid inclusion of the $700,000 death benefit in his estate?


A) six months
B) one year
C) three years
D) No minimum time period exists.

E) None of the above
F) A) and D)

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Praneh Patel, a widower, died in March of the current year.His gross estate is $5,325,000, and at the time of his death, he owed debts of $40,000.His will made a charitable bequest of $280,000 and left the rest of his property to his children.His administrative expenses are estimated to be about $55,000.What tax issues should the estate's CPA consider when preparing Praneh's estate tax return and his estate's income tax return?

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• What deductions will Praneh's estate r...

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The FMV of an asset for gift or estate tax purposes is the same except for


A) marketable securities.
B) land.
C) life insurance policies.
D) patents.

E) B) and C)
F) A) and D)

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Identify which of the following statements is false.


A) The "blockage" regulations allow the IRS to prevent the estate's executor from electing the alternate valuation date.
B) If the alternate valuation date is elected, changes in value that occur solely because of a "mere lapse of time" usually are to be ignored.
C) The alternate valuation date can be elected for estate tax purposes only if the election decreases the value of the gross estate and estate tax liability (after reduction for credits) .
D) If property is sold within 6 months of the date of death, the alternative valuation date is the date of sale.

E) A) and C)
F) None of the above

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Yoyo Corporation maintains a retirement plan for its employees to which it makes 70% of the contributions and the employees make 30%.Gary dies this year and is employed at the time of his death.Gary's spouse will receive an annuity valued at $600,000 from the retirement plan.How much of the annuity will be included in Gary's gross estate?


A) $600,000
B) $420,000
C) $180,000
D) $0

E) B) and D)
F) B) and C)

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Lou dies on April 12, 2011.All of Lou's property passed to Paula, his daughter.Paula dies on January 15, 2013.Both Lou's and Paula's estates pay federal estate taxes.Lou's estate tax was $350,000.How much can Paula's estate claim for a credit for tax on prior transfers?


A) $350,000
B) $280,000
C) $210,000
D) $140,000

E) A) and C)
F) A) and B)

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The payment date for estate taxes may be extended by the IRS for all of the following reasons except


A) the estate includes a 40% interest in a closely held business.
B) the estate includes a relatively large remainder or reversionary interest.
C) the executor of the estate shows reasonable cause.
D) All are valid reasons.

E) All of the above
F) B) and C)

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Identify which of the following statements is true.


A) The estate tax on interests in certain closely held businesses may be paid in installments over a 15-year period if elected.
B) An executor may elect to postpone payment of the estate tax attributable to a remainder or reversionary interest until six months after the interests of the other person(s) terminate.
C) A corporation with 25 owners can be classified as a closely held business if the decedent's gross estate holds 10% of the stock.
D) All of the above are false.

E) B) and C)
F) A) and D)

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