Question 1

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 2

Identify which of the following statements is true.

Accepted Answer

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

Question 3

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

Accepted Answer

A stock redemption is generally treated as a sale or exchange of property because the shareholder is receiving consideration in exchange for the surrender of their stock. This consideration may be in the form of cash or property. Therefore, the transaction may result in a gain or loss to the shareholder, which would be treated as capital gain or loss.

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

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

Accepted Answer

Liquidity refers to the availability of cash to pay estate taxes, debts, and other expenses. Executors may need to sell assets or borrow against them to ensure they have enough cash on hand to manage the estate. This can be a significant challenge, especially if the estate includes illiquid assets such as real estate or closely held businesses. Identifying deductions, computing the unified credit, and valuing assets are also important tasks for executors, but liquidity is often the most pressing concern.

Question 6

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 7

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

Accepted Answer

The GSTT imposes a tax on transfers of property that skip a generation, meaning the transfer goes from a grandparent to a grandchild without passing to the intervening generation (the child of the grandparent). This tax is in addition to other transfer taxes such as gift and estate taxes. Therefore, option B is the best choice as it accurately describes the purpose of the GSTT.

Question 8

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 9

A qualified disclaimer is a valuable estate planning tool because

Accepted Answer

A qualified disclaimer allows the person making the disclaimer to avoid taking possession of certain assets, which may be subject to gift or estate taxes. By disclaiming these assets, they are treated as if they were never received, and therefore not treated as a gift made by the person who disclaims. This can be useful in estate planning to help reduce the overall tax burden. However, the other choices listed are not necessarily benefits of a qualified disclaimer.

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

Identify which of the following statements is true.

Accepted Answer

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

Question 13

Identify which of the following statements is false.

Accepted Answer

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

Question 14

Identify which of the following statements is false.

Accepted Answer

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

Question 15

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 the Internal Revenue Code, Section 6166.

Question 16

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 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

Identify which of the following statements is true.

Accepted Answer

Special use valuation is a real estate valuation method available to estates that contain certain types of closely held businesses, including farms. This valuation method is used to help alleviate liquidity problems by valuing the property based on its current use rather than its highest and best use. Option A is false because the transferor is liable for the GSTT on direct skips. Option C is false because qualified disclaimers can be a useful estate planning tool, allowing a beneficiary to refuse an inheritance in order to pass it on to someone else. Option D is false because option B is true.

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.

Question 20

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...

Quiz 13: The Estate Tax

Identify which of the following statements is true.

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

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?

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

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

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

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

A qualified disclaimer is a valuable estate planning tool because

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?

Identify which of the following statements is true.

Identify which of the following statements is false.

Identify which of the following statements is false.

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.

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

Identify which of the following statements is true.

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

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?