Question 1

Which of the following statements is true concerning the maximum gift that can be given within a year without incurring any gift tax or using any of the unified credit?

Accepted Answer

Based on the current exclusion amounts, the first $13,000 ($26,000 with consent from a spouse) gifted to any one person during the calendar year is excluded from determining taxable gifts.

Question 2

When determining a decedent's gross estate for federal tax purposes, which of the following items would not be included?

Accepted Answer

The gross estate includes the fair value of all property in which the decedent had an interest at the date of death, regardless of the nature of the property or to whom it passes.

Question 3

Which of the following statements is true concerning federal income tax laws and estates?

Accepted Answer

Normally, the beneficiary is taxed on any taxable income that he or she received, and the estate, as a separate entity, is taxed on any income that it accumulates.

Question 4

Assuming that no stipulation is made in the will, indicate by placing a check mark in the appropriate column whether the typical accounting treatment of each of the following items would affect principal only, income only, or both principal and income accounts of an estate.

Accepted Answer

The answer of Assuming that no stipulation is made in...

Question 5

Betty Bloome died on February 28, 20X5. The following trial balance was prepared by the executor of Betty's estate as of October 31, 20X5:  
Required:
Prepare a charge and discharge statement as of December 31, 20X5.

Accepted Answer

The answer of Betty Bloome died on February 28, 20X5....

Question 6

The primary purpose of an estate's charge and discharge statement is to detail

Accepted Answer

A careful accounting of the transactions affecting the principal of the estate as well as the income of the estate is required. The fiduciary will prepare the estate's charge and discharge statement to accomplish this.

Question 7

The effect of the marital deduction is:

Accepted Answer

The marital deduction is allowed for the value of qualifying property passing to a surviving spouse, but it may defer estate taxes only until the death of the surviving spouse.

Question 8

The party to which legal title and management responsibilities are initially given in a trust agreement is referred to as the

Accepted Answer

The party to which legal title and management responsibilities are initially given in a trust agreement is referred to as the trustee.

Question 9

A charitable remainder trust

Accepted Answer

A charitable remainder trust distributes the income from trust assets to individual beneficiaries over a period of time, at which time the assets go to the remainderman, which must be a charitable organization.

Question 10

The gross estate of a decedent:

Accepted Answer

The gross estate includes the fair value of all property in which the decedent had an interest at the date of death, regardless of the nature of the property or to whom it passes.

Question 11

Which of the following is not true about the unified credit that accompanies the unified transfer tax?

Accepted Answer

No matter what the amount, gifts between spouses are not subject to gift tax; and therefore, would not reduce the credit.

Question 12

The starting point for the computation of federal estate tax is the gross estate. Which of the following statements is not true regarding the computation of the gross estate?

Accepted Answer

The gross estate includes transfers by the deceased during his or her lifetime in which certain rights are retained by the decedent. In order to prevent significant reduction in one's gross estate, certain property that the decedent transferred within three years prior to death may be included in the gross estate.

Question 13

A trust created through a will is called a(n)

Accepted Answer

A trust created through a will is called a testamentary trust.

Question 14

Jane Ramos owned stock with a cost of $200,000. The stock has a market value on Jane's date of death of $375,000. The stock was willed to Jane's niece Jenny. Which of the following is true?

Accepted Answer

The investment would be included in the estate at its fair value on the date of Jane's death. Jane's niece's basis in the property will also be the fair value of the investment.

Question 15

Planning for estate taxes should address:

Accepted Answer

These items should be considered in estate planning as well as maximizing the benefits of the marital deduction, taking actions to accomplish a step-up in property basis and planning estate liquidity.

Question 16

Which of the following statements is not true?

Accepted Answer

Charitable gifts, tuition payments made directly to an educational organization, or medical payments made on another's behalf are not considered taxable gifts.

Question 17

Which of the following statements is true concerning the election of the alternate valuation date?

Accepted Answer

Assets are included in the estate at their fair value on the date of death or on an alternate valuation date, if elected. If the alternate date is elected, all estate property must be valued as of six months after decedent's death. The alternate valuation date may be used only if it would reduce the total gross estate and decrease the estate tax liability.

Question 18

The unified tax base used to compute federal estate tax is calculated as follows:

Accepted Answer

Gross estate less deductions allowed is equal to the taxable estate. Post-1976 taxable gifts are added to the taxable estate to derive the unified tax base.

Question 19

The Charge and Discharge Statement accounting indicates the need to segregate

Accepted Answer

The Charge and Discharge Statement indicates the need to segregate accounting for principal items from income items.

Question 20

The alternate valuation date is how many months after the decedent's death?

Accepted Answer