Question 1

Tracey is unmarried and owns $17 million in stock and bonds. What is the result if Tracey dies this year and leaves all of her property to a qualified charity?

Accepted Answer

If Tracey leaves all her property to a qualified charity, the value of her estate will be reduced by the amount of the gift to the charity. Thus, her taxable estate will be zero, but her gross estate and estate tax basis may not necessarily be zero. However, since the question only asks about the taxable estate, the correct answer is C.

Question 2

Ethan owned a vacation home at the time of his death. Which of the following is a true statement if Ethan was married to Emma and resided in a common-law state at the time of his death?

Accepted Answer

The answer of Ethan owned a vacation home at the...

Question 3

Harold and Mary are married and live in a community-property state. During the marriage Harold bought a parcel of real estate for $210,000 in community funds and titled the property in his name alone. Mary died on January 30^th of this year and was survived by Harold, who did not remarry. The parcel of real property was worth $420,000 on January 30^th of this year but was only worth $357,000 at year-end. What amount, if any, is included in Mary's gross estate?

Accepted Answer

In a community-property state, each spouse owns half of the community property. Since the property was purchased with community funds, half of its value at the time of Mary's death ($420,000) is included in her gross estate, which is $210,000.

Question 4

At his death Tyrone's life insurance policy paid his estate $85,000. What amount, if any, is included in Tyrone's gross estate?

Accepted Answer

The answer of At his death Tyrone's life insurance policy...

Question 5

Harold and Mary are married and live in a community-property state. During the marriage Harold bought a parcel of real estate for $100,000 in community funds and titled the property in his name alone. Mary died on January 30 ^th of this year and was survived by Harold, who did not remarry. The parcel of real property was worth $250,000 on January 30 ^th of this year but was only worth $220,000 at year-end. What amount, if any, is included in Mary's gross estate?

Accepted Answer

In a community-property state, both spouses are considered to own equally any property acquired during the marriage with community funds. Therefore, even though the property was titled in Harold's name alone, Mary had a 50% ownership interest in the property. At Mary's death, her share of the property's value is included in her gross estate. Since the property was worth $250,000 at the time of her death, Mary's 50% share amounts to $125,000.

Question 6

Christopher's residence was damaged by a storm during the administration of his estate. Christopher's executor paid $120,000 to repair the residence after the storm. Which of the following is a true statement?

Accepted Answer

Christopher's estate paid for the repair of the residence, so the casualty loss would be deductible on the estate tax return, not on Christopher's individual income tax return. The executor can deduct the full amount of the loss, which in this case is $120,000. Option A is incorrect because a casualty loss cannot be deducted on an individual income tax return after death. Option B is partially correct, but the 10 percent limitation applies only to personal casualty losses claimed by the taxpayer during his lifetime, not to casualty losses claimed by a decedent's estate. Option D is incorrect because casualty losses are deductible on the estate tax return. Therefore, the correct answer is C.

Question 7

At his death Stanley owned real estate worth $345,000 with two other individuals as equal tenants in common. Stanley contributed $50,000 to the $100,000 total cost of the property. What amount, if any, is included in Stanley's gross estate?

Accepted Answer

As Stanley was a tenant in common with two other individuals, his share of the property would be one-third (assuming equal ownership between the three tenants). Therefore, his share of the property would be worth $115,000 ($345,000 ÷ 3). As this amount exceeds the $60,000 threshold for gross estate inclusion, it would be included in Stanley's gross estate. The fact that he contributed $50,000 to the purchase price of the property is not relevant in this calculation.

Question 8

At his death Jose owned real estate worth $22 million but subject to a mortgage of $7 million. Which of the following is a true statement?

Accepted Answer

The gross estate includes the full value of the property owned by the decedent at the time of death, which is $22 million in this case, regardless of any mortgages or debts.

Question 9

At his death Stanley owned real estate worth $448,050 with two other individuals as equal tenants in common. Stanley contributed $72,500 to the $145,000 total cost of the property. What amount, if any, is included in Stanley's gross estate?

Accepted Answer

The answer of At his death Stanley owned real estate...

Question 10

Chloe's gross estate consists of the following property valued at the date of death:  Chloe's real estate is encumbered by a mortgage of $450,000, and Chloe's executor paid her funeral costs of $6,000 and charged fees for $24,000. Which of the following is a true statement?

Accepted Answer

The answer of Chloe's gross estate consists of the following...

Question 11

At her death Emily owned real estate worth $2.5 million and other property worth $10 million. Property taxes of $200,000 were accrued on the real estate at the time of Emily's death. Which of the following is a true statement with respect to these items without considering any other owned property?

Accepted Answer

The answer of At her death Emily owned real estate...

Question 12

At her death Serena owned real estate worth $345,000 with her spouse in joint tenancy with the right of survivorship. Serena contributed $69,000 to the original cost of the property and her spouse contributed the remaining $138,000. What amount, if any, is included in Serena's gross estate?

Accepted Answer

When property is held in joint tenancy with the right of survivorship between spouses, the entire value of the property is included in the gross estate of the first spouse to die, except to the extent the executor can prove contributions to the purchase price by the surviving spouse. In this case, since the surviving spouse contributed $138,000 of the original cost, half of the property's value at Serena's death ($172,500) is included in her gross estate.

Question 13

At her death Serena owned real estate worth $210,000 with her spouse in joint tenancy with the right of survivorship. Serena contributed $50,000 to the original cost of the property and her spouse contributed the remaining $100,000. What amount, if any, is included in Serena's gross estate?

Accepted Answer

In joint tenancy with right of survivorship, the entire value of the property is included in the gross estate of the first to die, except to the extent the surviving spouse can prove contribution. Serena contributed $50,000 out of the total $150,000, so 1/3 of the property value ($210,000) is included in her estate, which is $70,000. However, since the property is jointly owned with a spouse, the marital deduction applies, and the amount included in the gross estate is $105,000.

Question 14

At her death Tricia owned a life insurance policy on her life that paid her daughter $500,000 upon her death. The policy was only valued at $25,000 prior to Tricia's death. What amount, if any, is included in Tricia's gross estate?

Accepted Answer

The full $500,000 is included in Tricia's gross estate because she owned the policy on her life at the time of her death. The fact that the policy was only valued at $25,000 prior to her death is irrelevant for estate tax purposes.

Question 15

Madison was married at the time of her death and her gross estate consisted of $22 million in stock and bonds. Madison left all of her property to her spouse. What is the result?

Accepted Answer

Because Madison left all of her property to her spouse, the marital deduction will apply, meaning that the value of the property left to the spouse will not be included in Madison's taxable estate. Therefore, her taxable estate will be zero.

Question 16

At her death Siena owned real estate worth $200,000 that was titled with her sister in joint tenancy with the right of survivorship. Siena contributed $50,000 to the total cost of the property and her sister contributed the remaining $75,000. What amount, if any, is included in Siena's gross estate?

Accepted Answer

The answer of At her death Siena owned real estate...

Question 17

Which of the following is a true statement?

Accepted Answer

The value of a remainder interest depends on the Section 7520 interest rate at the time of death. This is because the Section 7520 interest rate determines the present value of the future interest. The higher the interest rate, the lower the present value of the future interest and vice versa. Therefore, the Section 7520 interest rate has a direct impact on the value of the remainder interest. Choices A, C, and D are not true statements.

Question 18

The executor of Isabella's estate incurred administration expenses of $33,750 and paid $9,650 in funeral expenses. The executor charged the estate for $30,100 in fees. What is the maximum amount Isabella's estate can deduct in computing the adjusted gross estate?

Accepted Answer

The answer of The executor of Isabella's estate incurred administration...

Question 19

Which of the following is a true statement?

Accepted Answer

Funeral expenses for the decedent are deductible in computing the adjusted gross estate, but not in computing the gross estate. Executor's fees and the costs of administering the estate are deductible in computing both the gross estate and the adjusted gross estate. An executor cannot choose to deduct the decedent's funeral expenses on either the estate tax return or the estate's income tax return.

Question 20

The executor of Isabella's estate incurred administration expenses of $32,000 and paid $5,000 in funeral expenses. The executor charged the estate for $24,000 in fees. What is the maximum amount Isabella's estate can deduct in computing the adjusted gross estate?

Accepted Answer

The maximum amount Isabella's estate can deduct in computing the adjusted gross estate is the sum of administration expenses and funeral expenses, which is $32,000+$5,000=$37,000. The fees charged by the executor cannot be deducted in determining the adjusted gross estate. Therefore, the answer is option D, $61,000, which is the sum of the gross estate ($100,000, not given in the question) and the deductible expenses of $37,000.

Quiz 25: Transfer Taxes and Wealth Planning

Tracey is unmarried and owns $17 million in stock and bonds. What is the result if Tracey dies this year and leaves all of her property to a qualified charity?

Ethan owned a vacation home at the time of his death. Which of the following is a true statement if Ethan was married to Emma and resided in a common-law state at the time of his death?

At his death Tyrone's life insurance policy paid his estate $85,000. What amount, if any, is included in Tyrone's gross estate?

Christopher's residence was damaged by a storm during the administration of his estate. Christopher's executor paid $120,000 to repair the residence after the storm. Which of the following is a true statement?

At his death Stanley owned real estate worth $345,000 with two other individuals as equal tenants in common. Stanley contributed $50,000 to the $100,000 total cost of the property. What amount, if any, is included in Stanley's gross estate?

At his death Jose owned real estate worth $22 million but subject to a mortgage of $7 million. Which of the following is a true statement?

At his death Stanley owned real estate worth $448,050 with two other individuals as equal tenants in common. Stanley contributed $72,500 to the $145,000 total cost of the property. What amount, if any, is included in Stanley's gross estate?

Chloe's gross estate consists of the following property valued at the date of death: Chloe's real estate is encumbered by a mortgage of $450,000, and Chloe's executor paid her funeral costs of $6,000 and charged fees for $24,000. Which of the following is a true statement?

At her death Emily owned real estate worth $2.5 million and other property worth $10 million. Property taxes of $200,000 were accrued on the real estate at the time of Emily's death. Which of the following is a true statement with respect to these items without considering any other owned property?

At her death Serena owned real estate worth $345,000 with her spouse in joint tenancy with the right of survivorship. Serena contributed $69,000 to the original cost of the property and her spouse contributed the remaining $138,000. What amount, if any, is included in Serena's gross estate?

At her death Serena owned real estate worth $210,000 with her spouse in joint tenancy with the right of survivorship. Serena contributed $50,000 to the original cost of the property and her spouse contributed the remaining $100,000. What amount, if any, is included in Serena's gross estate?

At her death Tricia owned a life insurance policy on her life that paid her daughter $500,000 upon her death. The policy was only valued at $25,000 prior to Tricia's death. What amount, if any, is included in Tricia's gross estate?

Madison was married at the time of her death and her gross estate consisted of $22 million in stock and bonds. Madison left all of her property to her spouse. What is the result?

Which of the following is a true statement?

The executor of Isabella's estate incurred administration expenses of $33,750 and paid $9,650 in funeral expenses. The executor charged the estate for $30,100 in fees. What is the maximum amount Isabella's estate can deduct in computing the adjusted gross estate?

Which of the following is a true statement?

The executor of Isabella's estate incurred administration expenses of $32,000 and paid $5,000 in funeral expenses. The executor charged the estate for $24,000 in fees. What is the maximum amount Isabella's estate can deduct in computing the adjusted gross estate?