Question 1

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

Accepted Answer

All of the reasons listed are valid reasons for the IRS to extend the payment date for estate taxes.

Question 2

Melissa transferred $650,000 in trust in 2006: income for life to herself, the remainder to her son.What part, if any, of the value of the trust's assets will be included in Melissa's estate?

Accepted Answer

The answer of Melissa transferred $650,000 in trust in 2006:...

Question 3

The maximum amount of the stock redemption proceeds under Sec.303 is determined by summing all of the following except

Accepted Answer

All the options listed (the estate's death taxes, funeral expenses, and administrative expenses) are considered in determining the maximum amount of stock redemption proceeds under Section 303. This section allows a portion of the stock in a closely held business to be redeemed by the estate without the redemption being treated as a dividend, to the extent of paying death taxes, funeral expenses, and administrative expenses.

Question 4

Identify which of the following statements is true.

Accepted Answer

Special use valuation is available for farmland to help alleviate liquidity problems. The other statements are false. The transferor is liable for the GSTT in the case of a direct skip, and qualified disclaimers are available for estate planning purposes.

Question 5

One of the major problems facing executors in managing the estate is

Accepted Answer

Liquidity is a major problem facing executors because they may need to sell assets quickly to raise cash to pay estate taxes, debts, and expenses. If the estate is illiquid, the executor may be forced to sell assets at a discount or take out loans to cover expenses, which can reduce the value of the estate.

Question 6

Which of the following circumstances would cause the gifted property to be included in the donor's gross estate? I.Donor retains a life estate in the gift property.

Accepted Answer

I. Donor retains a life estate in the gift property: This means the donor has the right to use and enjoy the property for their lifetime. Since the donor has not completely given up their interest in the property, the value of the property will be included in the donor's gross estate for estate tax purposes.

II. Donor gifts the property within three years of death: According to the IRS, if a donor gifts property and dies within three years of the gift, the value of the property will be included in the donor's gross estate for estate tax purposes.

III. Donor fails to properly transfer ownership of the property: If the donor does not properly transfer ownership of the property to the recipient, the property will be considered part of the donor's gross estate for estate tax purposes.

IV. Donor gifts the property and retains certain powers or control over it: If the donor retains certain powers or control over the gifted property, such as the power to revoke or change the gift, the value of the property may be included in the donor's gross estate for estate tax purposes.

Question 7

In 2002, Gert made a $5,000,000 taxable gift.The 2002 gift tax on $5,000,000 was $2,275.800.Gert was entitled to a unified credit of $345,800, resulting in a gift tax of $1,193,000.The marginal tax rate in 2002 is 50%.Assume Gert dies in 2013 when the credit is $2,045.800 and the marginal rate is 40%, the tax on $5,000,000 would equal $1,945,800 before subtracting any credit.In arriving at Gert's estate tax liability, what is the amount subtracted for 1992 gift taxes paid?

Accepted Answer

The answer of In 2002, Gert made a $5,000,000 taxable...

Question 8

The GSTT's (generation-skipping transfer tax)purpose is

Accepted Answer

The GSTT is a form of transfer tax that is imposed on transfers of property from a grandparent to a grandchild (or any generation skipping person) without the property first passing to the grandparent's children. The purpose of the tax is to ensure that no generation of a family can avoid paying some form of transfer tax by simply passing property down to their grandchildren or other "skip persons" instead of to their own children. Therefore, Option B is the correct answer.

Question 9

Yee made $3 million of taxable gifts in 1993 and paid gift taxes (less the unified credit)of $1,098,000.Yee died in 2013 with a taxable estate of $10,000,000.At current rates, the gift taxes payable on $3 million would be $1,145,800.Yee died in a year when the unified credit was $2,045,800.Determine her estate tax liability.

Accepted Answer

The answer of Yee made $3 million of taxable gifts...

Question 10

Sasha gives $1,000,000 to her granddaughter.Sasha has used all of her unified credit and is in the 40% marginal gift tax bracket; ignore the annual exclusion and exemption.What is the amount of her tax on this transfer?

Accepted Answer

Since Sasha has used all of her unified credit and is in the 40% marginal gift tax bracket, the tax on the $1,000,000 gift would be 40% of $1,000,000, which equals $400,000.

Question 11

A qualified disclaimer is a valuable estate planning tool because

Accepted Answer

A qualified disclaimer allows the disclaimed assets to pass to the next beneficiary in line without being treated as a gift made by the person who disclaims. This can be useful for estate planning purposes, as it allows for more flexibility and control over the distribution of assets. The other answer choices are incorrect.

Question 12

Identify which of the following statements is false.

Accepted Answer

Life insurance is not always part of the estate of the insured. If the policy is owned by an irrevocable trust or if the beneficiary is someone other than the insured's estate, then the policy proceeds will not be subject to estate taxes or probate.

Question 13

A stock redemption to pay death taxes under Sec.303 is generally treated as

Accepted Answer

A stock redemption to pay death taxes under Sec. 303 is generally treated as a sale or exchange of property. This is because the estate is selling or exchanging the stock in order to pay the estate tax liability.

Question 14

Identify which of the following statements is true.

Accepted Answer

The statement in option A is true. Estate tax returns are not required to be filed unless the value of the gross estate and adjusted taxable gifts exceeds the exemption equivalent. Option B is false because estate taxes are generally due nine months after the decedent's date of death, not when the return is filed. Option C is false because estate tax returns are generally due nine months after the decedent's date of death, not 12 months. Therefore, option D is also false as none of the statements are completely true.

Question 15

Identify which of the following statements is false.

Accepted Answer

The transferor is responsible for paying the generation-skipping transfer tax (GSTT) in the case of a direct skip, not the transferee.

Question 16

Identify which of the following statements is true.

Accepted Answer

The answer of Identify which of the following statements is...

Question 17

Identify which of the following statements is false.

Accepted Answer

The answer of Identify which of the following statements is...

Question 18

Identify which of the following statements is true.

Accepted Answer

The answer of Identify which of the following statements is...

Question 19

In 2001, Clara made taxable gifts of $2 million.This year, Clara dies with a taxable estate of $4 million.At the time of her death, the FMV of the property Clara gifted in 2001 is $8 million.What is the amount of the estate tax base?

Accepted Answer

The answer of In 2001, Clara made taxable gifts of...

Question 20

Betty dies on February 20, 2013.Her estate consisted of the following assets, all valued as of her date of death:  What is Betty's gross estate?

Accepted Answer

C) (200,000 + 1,500,000 + 70,000). The life insurance policy is excluded since Betty is not the owner.

Quiz 13: The Estate Tax

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

Melissa transferred $650,000 in trust in 2006: income for life to herself, the remainder to her son.What part, if any, of the value of the trust's assets will be included in Melissa's estate?

The maximum amount of the stock redemption proceeds under Sec.303 is determined by summing all of the following except

Identify which of the following statements is true.

One of the major problems facing executors in managing the estate is

Which of the following circumstances would cause the gifted property to be included in the donor's gross estate? I.Donor retains a life estate in the gift property.

The GSTT's (generation-skipping transfer tax) purpose is

Sasha gives $1,000,000 to her granddaughter.Sasha has used all of her unified credit and is in the 40% marginal gift tax bracket; ignore the annual exclusion and exemption.What is the amount of her tax on this transfer?

A qualified disclaimer is a valuable estate planning tool because

Identify which of the following statements is false.

A stock redemption to pay death taxes under Sec.303 is generally treated as

Identify which of the following statements is true.

Identify which of the following statements is false.

Identify which of the following statements is true.

Identify which of the following statements is false.

Identify which of the following statements is true.

In 2001, Clara made taxable gifts of $2 million.This year, Clara dies with a taxable estate of $4 million.At the time of her death, the FMV of the property Clara gifted in 2001 is $8 million.What is the amount of the estate tax base?

Betty dies on February 20, 2013.Her estate consisted of the following assets, all valued as of her date of death: What is Betty's gross estate?