Question 1

The quantity of stock that a decedent owns in a closely held corporation can have an effect on its valuation. Explain this statement.

Accepted Answer

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Question 2

At the time of his death, Al owned a majority interest in Macaw Corporation, a closely held holding company. Macaw's major asset is stock in ABC Grocers, a regional supermarket chain. The ABC stock has a per share basis to Macaw of $50 and is currently worth $2,000. In what manner, if any, may these facts have a bearing on the value of the Macaw stock included in Al's gross estate?

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The answer of At the time of his death, Al...

Question 3

Match each statement with the correct choice. Some choices may be used more than once or not used at all
-Valuation of a commercial annuity contract.

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Question 4

Mel's estate includes a number of notes receivable signed by his daughter, Tammy. These notes were issued by Tammy on different occasions when she obtained funds from Mel. The total face amount of these notes is $150,000. The notes are forgiven by Mel's will. How much, if any, regarding these notes should be included in Mel's gross estate?

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The answer of Mel's estate includes a number of notes...

Question 5

Match each statement with the correct choice. Some choices may be used more than once or not used at all
-Current use valuation as to certain realty (§ 2032A).

Accepted Answer

Current use valuation as to certain realty (§ 2032A) requires the use of special use value, which is usually lower than fair market value, in order to encourage the preservation of family farms and businesses.

Question 6

Bob and Paige are married and live in a common law state. Bob owns some real estate (fair market value of $560,000) which they would like to give to their five adult married children. The spouses of their children (e.g., son-in-law, daughter-in-law) are to be included in the gifts. Bob and Paige do not want to use any of their unified transfer tax credit. Assuming an annual exclusion in the amount of $14,000, suggest a viable way to structure the transfer.

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Question 7

Match each statement with the correct choice. Some choices may be used more than once or not used at all
-Valuation of a life insurance policy that is not paid up.

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Question 8

Match each statement with the correct choice. Some choices may be used more than once or not used at all
-Marital deduction allowed.

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Question 9

Clancy and Maureen are husband and wife and have always lived in a community property state. When Clancy learns that he is terminally ill, he gives to Maureen all of his share of the community investments that have declined in value. Why?

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Question 10

Wesley has created an irrevocable trust: life estate to Eve, remainder to Ernest upon Eve's death. In using the IRS valuation tables, what information is needed to determine the value of Eve's life estate?

Accepted Answer

The answer of Wesley has created an irrevocable trust: life...

Question 11

How can a disclaimer by an heir increase the charitable deduction allowed a decedent? Is such a disclaimer always wise? Explain.

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Question 12

Andrew makes a gift of securities (basis of $1,100,000; fair market value of $800,000) to his son, Carl. As a result of the transfer, Andrew paid a gift tax of $80,000. What is Carl's income tax basis in the securities if the gift occurred in 2015?

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The answer of Andrew makes a gift of securities (basis...

Question 13

Describe the various tax advantages that are available from donating a conservation easement to charity.

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Question 14

Barney creates a trust, income payable to Madison for five years, remainder to Emma. Emma is Barney's daughter (and a single parent), and Madison is his 19-year old granddaughter. What might be the justification for this type of trust?

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The answer of Barney creates a trust, income payable to...

Question 15

At the time of her death in 2015, Carol owns 60% of the stock in Drab Corporation, with the balance of the stock held by family members. Drab Corporation's total profits for the past five years are $3,200,000, and the book value of its stock is $2,400,000. If 8.5% is an appropriate rate of return and goodwill exists, what is a possible value for the stock to be included in Carol's gross estate?

Accepted Answer

The answer of At the time of her death in...

Question 16

Zane makes a gift of stock in Cerulean Company to family members. Cerulean is a closely held corporation that is not traded on any exchange. To hedge on the value used for gift tax purposes, Zane also donates some of the stock to a qualified charity. Explain the advantage of this approach.

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Question 17

A well-known artist dies and among her assets are a large number of her paintings. What approach might be taken to lower the value of her estate?

Accepted Answer

The answer of A well-known artist dies and among her...

Question 18

How could the election of the alternate valuation date (§ 2032) increase a decedent's marital deduction?

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The answer of How could the election of the alternate...

Question 19

Match each statement with the correct choice. Some choices may be used more than once or not used at all
-Discount for lack of marketability as to stock.

Accepted Answer

The discount for lack of marketability as to stock often considers the cost of going public (E) among other factors, as this cost can significantly impact the marketability and thus the valuation of privately held stock.

Question 20

Abigail makes a gift of stock (basis of $600,000; fair market value of $1,200,000) to her son, Spencer. As a result of the transfer, Abigail paid a gift tax of $120,000. What is Spencer's income tax basis in the stock if the gift occurred after 1976?

Accepted Answer

The answer of Abigail makes a gift of stock (basis...

Quiz 19: Family Tax Planning

The quantity of stock that a decedent owns in a closely held corporation can have an effect on its valuation. Explain this statement.

Match each statement with the correct choice. Some choices may be used more than once or not used at all -Valuation of a commercial annuity contract.

Match each statement with the correct choice. Some choices may be used more than once or not used at all -Current use valuation as to certain realty (§ 2032A) .

Match each statement with the correct choice. Some choices may be used more than once or not used at all -Valuation of a life insurance policy that is not paid up.

Match each statement with the correct choice. Some choices may be used more than once or not used at all -Marital deduction allowed.

Clancy and Maureen are husband and wife and have always lived in a community property state. When Clancy learns that he is terminally ill, he gives to Maureen all of his share of the community investments that have declined in value. Why?

Wesley has created an irrevocable trust: life estate to Eve, remainder to Ernest upon Eve's death. In using the IRS valuation tables, what information is needed to determine the value of Eve's life estate?

How can a disclaimer by an heir increase the charitable deduction allowed a decedent? Is such a disclaimer always wise? Explain.

Andrew makes a gift of securities (basis of $1,100,000; fair market value of $800,000) to his son, Carl. As a result of the transfer, Andrew paid a gift tax of $80,000. What is Carl's income tax basis in the securities if the gift occurred in 2015?

Describe the various tax advantages that are available from donating a conservation easement to charity.

Barney creates a trust, income payable to Madison for five years, remainder to Emma. Emma is Barney's daughter (and a single parent), and Madison is his 19-year old granddaughter. What might be the justification for this type of trust?

Zane makes a gift of stock in Cerulean Company to family members. Cerulean is a closely held corporation that is not traded on any exchange. To hedge on the value used for gift tax purposes, Zane also donates some of the stock to a qualified charity. Explain the advantage of this approach.

A well-known artist dies and among her assets are a large number of her paintings. What approach might be taken to lower the value of her estate?

How could the election of the alternate valuation date (§ 2032) increase a decedent's marital deduction?

Match each statement with the correct choice. Some choices may be used more than once or not used at all -Discount for lack of marketability as to stock.

Abigail makes a gift of stock (basis of $600,000; fair market value of $1,200,000) to her son, Spencer. As a result of the transfer, Abigail paid a gift tax of $120,000. What is Spencer's income tax basis in the stock if the gift occurred after 1976?