Question 1

Identify which of the following statements is true.

Accepted Answer

Special use valuation is indeed available for farmland to help alleviate liquidity problems. The other statements are false. The transferor, not the transferee, is liable for the GSTT in the case of a direct skip, and qualified disclaimers are frequently used in estate planning to achieve specific objectives.

Question 2

Identify which of the following statements is true.

Accepted Answer

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

Question 3

Identify which of the following statements is true.

Accepted Answer

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

Question 4

On December 1,1976,Bart made a gift and claimed a $30,000 specific exemption.When Bart died in 2008,his tax base was $2,000,000.Assuming the maximum unified credit is $780,800,what is the credit available when computing Bart's estate tax is what?

Accepted Answer

The answer of On December 1,1976,Bart made a gift and...

Question 5

A qualified disclaimer is a valuable estate planning tool because

Accepted Answer

A qualified disclaimer allows the person making the disclaimer to refuse an inheritance or gift, which can be helpful in estate planning to potentially reduce estate taxes or redirect assets to other intended beneficiaries. By qualifying the disclaimer, it is not treated as a gift made by the person making the disclaimer, which can have advantageous tax implications. The other options listed are not accurate statements about the benefits of a qualified disclaimer.

Question 6

Identify which of the following statements is false.

Accepted Answer

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

Question 7

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

Accepted Answer

The GSTT imposes a transfer tax on certain gifts and inheritances made to beneficiaries who are two or more generations below the donor. It is designed to prevent wealthy individuals from avoiding gift and estate taxes by transferring assets to their grandchildren or great-grandchildren instead of their children. The tax rate for GSTT is generally higher than the gift and estate tax rates. This tax applies only once per generation, not every other generation. Therefore, option A and C are incorrect.

Question 8

Identify which of the following statements is false.

Accepted Answer

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

Question 9

Compare the credits available for estate tax purposes with the credits available for gift tax purposes.What differences exist?

Accepted Answer

The answer of Compare the credits available for estate tax...

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

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?

Accepted Answer

The answer of Lou dies on April 12,2011.All of Lou's...

Question 12

Joe dies late in 2011 and his estate is subject to an estate tax of $2 million.He leaves all of his assets to his daughter,Claudia.Claudia dies in early 2013.Which of the following statements is correct?

Accepted Answer

The answer of Joe dies late in 2011 and his...

Question 13

An executor may elect to postpone payment of the estate tax attributable to a remainder or reversionary interest until 6 months after the interests of the other person(s)terminate.

Accepted Answer

This is true according to IRS regulations (section 6166).

Question 14

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

Accepted Answer

A stock redemption is treated as a sale or exchange of property because it involves the transfer of ownership of the stock back to the corporation in exchange for a payment to the shareholder. This payment is generally used to pay death taxes owed by the shareholder's estate.

Question 15

Compare the tax treatment of administration expenses with that of the decedent's debts.

Accepted Answer

The answer of Compare the tax treatment of administration expenses...

Question 16

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

Accepted Answer

All of the estate's death taxes, funeral expenses, and administrative expenses are allowable as part of the maximum amount of the stock redemption proceeds under Sec. 303.

Question 17

Guy died this year.His estate includes a closely held business interest valued at $400,000 and other property valued at $675,000.Guy's allowable Sec.2053 and 2054 deductions total $75,000.Within three years of death,partly in hopes of qualifying his estate for the installment payment allowed under Sec.6166 treatment,Guy made gifts of listed securities of $350,000 (at 2002 valuations)and paid no gift tax on the gift.Is Guy's estate eligible for Sec.6166 treatment?

Accepted Answer

The answer of Guy died this year.His estate includes a...

Question 18

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

Accepted Answer

Liquidity can be a major problem for executors because they may need to sell assets in order to pay debts, taxes, and distributions to beneficiaries. If the estate does not have enough liquid assets to cover these expenses, the executor may need to borrow money or sell assets at a lower value than they are worth. Identifying deductions, calculating the unified credit, and valuing assets are also important tasks for executors, but liquidity is often the most pressing issue.

Question 19

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. If the estate includes a 40% interest in a closely held business or a relatively large remainder or reversionary interest, it may be difficult for the executor of the estate to come up with the funds to pay the estate tax by the original due date. The executor can request an extension if they can show reasonable cause for the delay.

Question 20

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...

Quiz 13: The Estate Tax

Identify which of the following statements is true.

Identify which of the following statements is true.

Identify which of the following statements is true.

On December 1,1976,Bart made a gift and claimed a $30,000 specific exemption.When Bart died in 2008,his tax base was $2,000,000.Assuming the maximum unified credit is $780,800,what is the credit available when computing Bart's estate tax is what?

A qualified disclaimer is a valuable estate planning tool because

Identify which of the following statements is false.

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

Identify which of the following statements is false.

Compare the credits available for estate tax purposes with the credits available for gift tax purposes.What differences exist?

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?

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?

Joe dies late in 2011 and his estate is subject to an estate tax of $2 million.He leaves all of his assets to his daughter,Claudia.Claudia dies in early 2013.Which of the following statements is correct?

An executor may elect to postpone payment of the estate tax attributable to a remainder or reversionary interest until 6 months after the interests of the other person(s)terminate.

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

Compare the tax treatment of administration expenses with that of the decedent's debts.

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

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

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