Question 1

Special Use Valuation is only applicable to truck farms.

Accepted Answer

Special use is applicable to other types of farmers, timber growers and any closely-held business realty that qualiﬁes.

Question 2

fte following is a partial list of relevant items available when ﬁling Wilma Pott's estate tax return: (1.) Two years before she died, Wilma sold stocks, now worth $90,000, then $65,000, for $30,000, to her son. (2.) Wilma owned a summer house, worth $50,000, in joint tenancy with her sister, Betsy, who paid for it.
(3)) Wilma's home was held in a tenancy by the entirety with her husband, Wilbur, who paid for it, and is worth
$150,000.
(4)) Wilma's clothes and shoes are worth $800. From the above, Wilma's gross estate includes:

Accepted Answer

Only items (3) and (4) are includible

Question 3

A number of deductions are allowable from the gross estate. Which of the following expenditures is deductible?

Accepted Answer

Only the funeral expenses are deductible
 Note that post-mortem interest is generally nondeductible

Question 4

Which of the following items is not includible in the decedent's gross estate?

Accepted Answer

If the record date occurs after death the estate may have income, but the dividend is not includible in the estate as an asset at the time of death.

Question 5

When a lump-sum distribution from a qualiﬁed pension plan is made to a named beneﬁciary, the following amount is not includible in the plan participant's gross estate.

Accepted Answer

the re is generally no exclusion after 1984.

Question 6

fte donee-beneﬁciary of a trust may be given a number of rights and powers over the trust without the trust fund becoming includible in the donee's gross estate. Such "permissible" rights and powers include the following, except:

Accepted Answer

Even (c) is a special power, but the power to appoint the principal, even after death, is a general power that is taxable under Code Sec
 2041.

Question 7

When Cyrus Caldﬁeld died he left his wife, Brenda, a number of items. Which of the following items includible in Cyrus's gross estate and actually received by Brenda qualiﬁes for the marital deduction?

Accepted Answer

A remainder is not a terminable interest, but only its actuarial value is deductible

Question 8

fte gross estate may diﬀer greatly from the probate estate. fte following items are includible in the gross estate, but not the probate estate, except:

Accepted Answer

the decedent's one-half of the community property must go through probate

Question 9

fte following assets, which are not part of the probate estate, nevertheless are includible in the gross estate, except:

Accepted Answer

A sale for full value removes the property from the estate

Question 10

Which of the following taxes are not deductible from the gross estate as a claim against the estate?

Accepted Answer

the tax is only deductible if the property is includible

Question 11

Which of the following retained powers is not an "incident of ownership" in a life insurance policy?

Accepted Answer

No, quitting one's job is too indirect a way to cancel a policy.

Question 12

Assume that John Henry died on July 1, 2012 and that sales of Video Corporation stock that he owned occurred four trading days before his death and two trading days after his death. Also, assume that the mean sales prices were $20 and $15, respectively, and that Mr. Henry owned 1,000 shares at date of death. What is the per share value of John Henry's stock on his date of death?

Accepted Answer

(4(20) + 2(15))/6 = $18.33.

Question 13

ftere are currently 20 community property states in the United States.

Accepted Answer

the re are 10 community property states in the U.S.

Question 14

fte following statements about reporting dividends on the estate tax return are all true, except:

Accepted Answer

ftis is not true if death occurred prior to the record date

Question 15

fte following statements about "Qualiﬁed Terminable Interest Property" (QTIP) trusts are true, except:

Accepted Answer

(4(15) + 2(20))/6 = $16.67.

Question 16

All the following items are includible in the gross estate of the decedent, John Palmer, except:

Accepted Answer

Since John did not contribute to the purchase, the annuity is excluded
 Code Sec
 2039(b).

Question 17

Crummey trusts represent an exception to the gift tax's present interest rule.

Accepted Answer

Crummey trusts allow the beneficiaries to have a present interest in the gifted assets, which qualifies for the annual gift tax exclusion. This is an exception to the general rule that gifts must be of a "present interest" to qualify for the exclusion.

Question 18

General powers of appointment that are limited by ascertainable standards do not bring property into the Estate Tax Return.

Accepted Answer

General powers of appointment that are limited by ascertainable standards do not bring property into the Estate Tax Return because they are not considered part of the decedent's estate.

Question 19

Brandon Kingsley died in 2012. fte tentative estate tax is $700,000. Brandon also paid $25,000 in gift taxes on post-1976 gifts. fte estate tax payable is:

Accepted Answer

$675,000 less the uniﬁed credit of $1,772,800.

Question 20

fte following statements regarding the estate tax return, Form 706, are true, except:

Accepted Answer

the re is no short form in the estate tax area

Quiz 17: Federal Estate Tax, Federal Gift Tax and Generation-Skipping Transfer Tax