Question 1

Robert and Kristen are husband and wife.Ten years ago,they purchased stock for $500,000.Kristen dies first in 2012 when the property is worth $1,000,000.Assuming the property passes to Robert,what is his income tax basis under the following ownership assumptions?

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Question 2

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 3

Even though it results in more estate tax liability,the executor of an estate uses date of death value (rather than § 2032 alternate valuation date).

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Question 4

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

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Question 5

In terms of future estate tax (and death tax)savings,there are numerous advantages to making lifetime transfers.In this connection,comment on each of the following.

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Question 6

What is the major disadvantage of an estate freeze using common and preferred stock in a corporation? Major advantage?

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Question 7

Using investments worth $1 million,Roland establishes a trust,life estate to Melinda,remainder to Kim.

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Question 8

In connection with a traditional IRA that is transferred at death,comment on the tax implications of each of the following.

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Question 9

Giselle,a widow,has an extensive investment portfolio that has appreciated in value.Starting this year,she initiates a policy of making annual gifts of securities to her grandchildren who are attending college.Evaluate Giselle's policy in terms of the:

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Question 10

One of the objectives of establishing a program of lifetime giving is to transfer assets that are likely to appreciate in value.Examples include life insurance policies,valuable collections (e.g. ,art works),vacation homes,and undeveloped real estate.However,such gifts could cause economic problems for certain donees.Explain why.

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Question 11

Warren sells property that he inherited five years ago from his mother,Candice.Warren believes that the property was significantly undervalued when it was listed on the estate tax return filed for Candice's estate.For income tax purposes,can Warren deviate from this value? Explain.

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Question 12

In arriving at the value of stock in a closely held business,the IRS frequently imputes goodwill.Comment on how the following independent factors would affect the determination of goodwill.

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Question 13

If the special use valuation method of § 2032A is elected and certain continuing requirements are not satisfied,recapture occurs.

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Question 14

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

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Question 15

What are some of the pitfalls in the use of § 2032A (special use valuation method)?

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Question 16

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 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?

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Question 18

Regarding the effects of § 1014(e)(i.e. ,step-up in basis and the one-year rule),comment on the following variables.

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Question 19

When will the price specified in a buy and sell agreement control the value used for estate tax purposes?

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Question 20

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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Quiz 19: Family Tax Planning