Question 1

The deferral approach to the estate tax marital deduction (as opposed to the equalization approach)is advisable if the surviving spouse is in good health and has few assets.

Accepted Answer

The deferral approach allows for the unlimited marital deduction to be postponed until the death of the surviving spouse, potentially reducing the overall estate tax liability. This approach is recommended if the surviving spouse has few assets and is expected to live for a considerable amount of time. The equalization approach, on the other hand, divides the estate into equal shares between the spouses and allows each spouse to use their individual exemption amount, which may be more beneficial if the surviving spouse has significant assets or poor health.

Question 2

A decedent owned 25% of the voting stock of Siskin Corporation.Siskin has 53 shareholders.The decedent's estate cannot qualify for the § 6166 election.

Accepted Answer

The reason for the decedent's estate not being able to qualify for the § 6166 election is not mentioned in the given information. The information provided only states the percentage of voting stock owned by the decedent and the number of shareholders in the corporation.

Question 3

At the time of her death in 2009,Corinne owned stock in Gray Corporation.The stock is traded on a local exchange with the most recent selling prices as follows.

Presuming no alternate valuation date election,Corinne's gross estate should include a per share value of:

Accepted Answer

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

Question 4

Because of the estate tax deduction,a testamentary bequest to charity is preferable to a lifetime transfer.

Accepted Answer

The answer of Because of the estate tax deduction,a testamentary...

Question 5

Which,if any,of the following statements reflects the correct tax valuation rules?

Accepted Answer

As to notes receivable,provision for interest must be considered.Also,maturity date,collateral available,and other factors will have an impact on the note's value (choice a.).The classified section of a newspaper is only relevant for tangible personalty that is normally sold by this means (choice d.).

Question 6

Paula owns an insurance policy on her life payable to her estate.On Paula's death,the insurance proceeds are included in her gross estate but not her probate estate.

Accepted Answer

The answer of Paula owns an insurance policy on her...

Question 7

Which of the following independent statements correctly reflects the valuation rules applicable to estate and gift taxes?

Accepted Answer

The answer of Which of the following independent statements correctly...

Question 8

Which,if any,of the following factors should reduce the value of a note receivable included in the gross estate of the holder?

Accepted Answer

The answer of Which,if any,of the following factors should reduce...

Question 9

Herbert leaves one-half of his estate to his wife,Ramona,and the remainder to a qualified charity.Herbert's estate taxes would be reduced if Ramona disclaims her interest in favor of the charity.

Accepted Answer

The answer of Herbert leaves one-half of his estate to...

Question 10

Cost and time are usually saved by passing ownership to out-of-state real estate by gift rather than by death.

Accepted Answer

When property ownership is transferred by gift, it is typically not subject to the probate process and therefore can save both time and money compared to transferring ownership upon death.

Question 11

In satisfying the more-than-35% test for qualification under § 6166,interests in multiple closely held businesses are aggregated when the decedent's gross estate includes 20% or more of the value of each such business.

Accepted Answer

This statement is true according to the requirements for qualification under § 6166. If the decedent's gross estate includes 20% or more of the value of each closely held business, then those interests are aggregated for the purpose of the more-than-35% test.

Question 12

Ramon sells a parcel of land (basis of $100,000;fair market value of $300,000)to his church.As long as the selling price does not exceed $100,000,Ramon recognizes no gain on the sale.

Accepted Answer

The answer of Ramon sells a parcel of land (basis...

Question 13

Derrick dies,and under the terms of his will,all of his property passes outright to Dion (Derrick's surviving wife).Under these circumstances,there is no need for Derrick's executor to make a QTIP election.

Accepted Answer

A QTIP election is only necessary when the property passing to a surviving spouse is subject to a trust. Since Derrick's property is passing outright to Dion, there is no need for his executor to make a QTIP election.

Question 14

Under proper circumstances,a disclaimer by an heir may increase the charitable deduction allowed a decedent.

Accepted Answer

If an heir disclaims a portion of their inheritance and that portion is then given to charity, the estate may be eligible for a larger charitable deduction on the estate tax return. This is because the charitable deduction is based on the value of the assets passing to charity, and disclaiming a portion of the inheritance increases the value passing to charity. However, it is important to note that proper planning and execution are required for this strategy to be effective.

Question 15

A disclaimer by a surviving spouse may not generate additional estate tax even though it reduces the amount of marital deduction allowed.

Accepted Answer

A properly executed disclaimer by a surviving spouse is a tax planning tool that allows certain assets to pass directly to other beneficiaries without generating additional estate tax. Even though the disclaimer reduces the amount of marital deduction allowed, it can still result in a more tax-efficient transfer of assets.

Question 16

In satisfying the more-than-35% test of § 6166 (i.e. ,extended estate tax payment schedule relative to an interest in a closely held business),some prior gifts the decedent may have made must be considered.

Accepted Answer

The prior gifts made by the decedent are considered in order to determine whether the value of the interest in the closely held business exceeds 35% of the adjusted gross estate and therefore qualifies for the § 6166 extended payment schedule.

Question 17

Several years ago,Tad purchased land listing ownership as "Tad,Ellen,and Kay,equal tenants in common." In the current year,Kay dies first.None of the value of the land is included in Kay's probate estate.

Accepted Answer

The answer of Several years ago,Tad purchased land listing ownership...

Question 18

Mitzi dies in 2009 owning assets of $7 million.Under her will,$3.5 million passes to her children and the balance to her husband.Presuming Mitzi never made any taxable gifts during her lifetime,no estate tax results from Mitzi's death.

Accepted Answer

The estate tax exemption in 2009 was $3.5 million, which means that Mitzi's estate was fully covered by the exemption and no estate tax would be due. The bequest to her husband also qualifies for the unlimited marital deduction, so no estate tax is due on that portion either.

Question 19

If § 6166 applies,a 2% rate of interest applies to the full amount of the estate tax value as to which the estate tax is deferred.

Accepted Answer

There is an estate tax value limit on the application of the 2% interest rate.For 2008,the amount is $1,280,000.

Question 20

For the IRS to grant a discretionary extension of time to pay estate taxes (under § 6161),the executor must show that the estate would otherwise undergo undue hardship.

Accepted Answer

The answer of For the IRS to grant a discretionary...

Quiz 19: Family Tax Planning