Fundamentals of Estate Planning Test Preparation: New HS-330 Dumps To Enhance Your Understanding Skills

1. Which of the following is an example of a taxable gift for federal gift tax purposes?

2. The following are facts concerning a decedent’s estate:

Taxable estate $1.700, 000

Pre-1977 taxable gifts 200, 000

Post-1976 adjusted taxable gifts 50, 000

Post-1976 gifts made to a qualified charity 100, 000

The tentative tax base of this estate is

3. An executor elects to value the assets of the estate at the alternative valuation date 6 months after death.

Which of the following statements concerning the estate tax value of assets included in this estate is correct?

4. The interest rate for loans from the Federal Land Sank is 8 percent.

For federal estate tax purposes, the farm method valuation formula would result in a current use value for the farm of

5. Which of the following types of real properly ownership will be deemed to be a tenancy in common?

6. Which of the following statements concerning property ownership by a married couple residing in a community-property state is correct?

7. Which of the following statements concerning a simple trust is correct?

8. On the advice of their attorney and accountant, Betsy and John have decided to make substantial transfers. They would like to pass most of their considerable wealth to their grandchildren.

Which of the following statements concerning gifts made to their grandchildren is correct?

9. The decedent, D, died this year.

The facts concerning D estate are:

Gross estate $3,400,000

Marital deduction 0

Charitable deduction 600,000

Funeral & administration expenses 00,000

Gifts made after 1976 170,000

State death taxes payable 192,000

What is D taxable estate?

10. On January 1, 2004 a father gave his daughter a $200,000 straight (ordinary) life insurance policy on his life. Premiums are paid annually. The pertinent facts about the policy are: Date of issue: July 1, 1992

Premium paid on July 1, 2003 $3200

Terminal reserve on July 1, 2003 20,000

Terminal reserve on July 1, 2004 24,000

What is the value of the policy for federal gift tax purposes?

11. A married man has two adult sons. His entire estate is in excess of $1,500,000 and consists entirely of probate assets. He wants to make certain that if he predeceases his wife she will receive all estate income as long as she lives, and the assets remaining at her death will pass equally to their two sons. He wants to pass all assets to this wife and sons as free of federal estate taxes as possible.

To best accomplish these objectives, the man should include which of the following estate plans in his will?

12. Among the assets in a decedent’s gross estate is stock in a closely held corporation that was left to a

nephew. The interest passing to the nephew is required to bear the burden of all estate taxes and

expenses.

The relevant facts about this estate are:

Adjusted gross estate $1,200,000

Fair market value of stock in the

closely held corporation 500,000

Administration and funeral expenses 25,000

State inheritance taxes 40,000

Federal estate taxes 160,000

What amount of closely held corporate stock may be redeemed under IRC Section 303 so that the redemption will be treated as a sale or exchange rather than a dividend distribution?

13. A married man died this year leaving a gross estate of $3,200,000.

Additional facts concerning his estate are:

Administration expenses and debts $ 250,000

Marital deduction 1,200,000

Applicable credit amount (2005) 555,800

Applicable exclusion amount (2005) 1,500,000

State death taxes payable 20,400

Under the Unified Rate Schedule for computing estate taxes if the amount with respect to which the tentative tax to be computed is over$1,000,000 but not over $1,250,000, the tentative tax is $345,800, plus 41 percent of the excess of such amount over $1,000,000. If the amount is over $1,250,000 but not over $1,500,000, the tentative tax is then $448,300, plus 43 percent of the excess of such amount over $1,250,000. If the amount is over $1,500,000 but not over $2,000,000, the tentative tax is then $555,800 plus 45% of the excess of such amount over $1,500,000.

Based on these facts, the net federal estate tax payable is

14. Which of the following statements concerning both estates and complex trusts is correct?

15. A widow made the following cash gifts during the current year:

Donee Amount of Gift

A qualified charity $40000

A close friend 30,000

Her sister 5,000

Her daughter 15,000

Her brother 10,000

The total amount of the taxable gifts made this year was

16. A man is planning to establish and fund a 20-year irrevocable trust for the benefit of his two sons, aged 19 and 22, and plans to give the trustee power to sprinkle trust income.

From the standpoint of providing federal income, gift, and estate tax savings, which of the following would be the best choice of trustee?

17. A man died in February of this year. Last year, when he learned that he had a terminal illness, he immediately made the following gifts and filed the required gift tax return:

Fair Market Value

Gift of listed stock to a

qualified charity $100,000

Gift of listed bonds to his wife 200,000

Gift of a boat to his son 10,000

Gift of a sports car to his daughter 10,000

What amount must be brought back to the man’s estate as an adjusted taxable gift in the calculation of his federal estate taxes?

18. A widower dies leaving a net probate estate of $300,000.

At the time of his death, his descendants are as follows:

A son, Joe, who has no children;

A deceased daughter, Mary, whose two children, Irene and Sally, survive; and A daughter, Anne, who has one child, Harry

Assuming that the widower’s will provides for the distribution of his assets in equal shares to his children, per stripes, which of the following correctly states the amounts each descendant will receive?

19. Which of the following areas of consideration present common ethical issues for the estate planner?

20. A father deeded a house as a gift to his daughter in 1990 but retained the right to live in it until his death. He died this year, while still living in the house. The following are relevant facts: The father bought the property in 1980 for $140,000. The fair market value of the property when the gift was made in 1990 was $170,000. The father filed a timely gift tax return but paid no gift tax because of the applicable credit amount. The fair market value of the property at the father’s death was $200,000. The daughter sold the property 3 months after her father’s death for $200,000.

She had a gain of

21. The Decedent, T, died this year.

The facts concerning T estate are:

Gross estate $2,700,000

Marital deduction 900,000

Charitable deduction 110,000

Gifts made after 1976 130,000

State death taxes payable 165,000

What is T taxable estate?

22. When the owner of a closely held business dies, the payment of a portion of the federal estate tax may be deferred for a period of several years if the estate otherwise qualifies under the provisions of IPC Section 6166.

Which of the following statements concerning this deferral of federal estate tax is correct?

23. Which of the following statements concerning property is correct?

24. A$40,000 bank account. Mr. and Mrs. Allen own the account jointly with the right of survivorship even though Mrs. Allen made all the deposits.

What amount of the family property will be included in Mr. Allen’s gross estate for federal estate tax purposes?

25. Under the terms of his will, a man left his residuary estate to a testamentary trust for the benefit of his wife.

Which of the following powers with respect to the trust will cause the entire trust principal to be includible in the gross estate of the widow for federal estate tax purposes?

26. Mr. Barlow died early this year. Under the terms of his will he left all his real estate and tangible personal property to his son. All the remainder of his probate estate was left to his wife, Mrs. Barlow. The following is a list of Mr.

Barlow’s probate assets and their fair market values at the time of his death:

Commercial real estate $200,000

Furniture and fixtures 100,000

Listed common stock 150,000

Notes receivable 250,000

In addition, Mrs. Barlow owned a $400,000 life insurance policy on Mr. Barlow’s life with Mr. Barlow’s estate designated as beneficiary. Based on this information, what is the amount of property in Mr. Barlow’s estate qualifying for the federal estate tax marital deduction?

27. A married man died intestate, in addition to his wife, he was survived by two minor children and both his parents.

Which of the following statements describes the typical intestate distribution in this situation?

28. It a grantor establishes an irrevocable trust; the income of the trust will be taxed to the grantor if it is used to pay premiums for life insurance on the life of

29. Which of the following statements concerning ownership of property under a tenancy by the entirety is correct?

30. Which of the following statements concerning state death taxes is correct?

31. Which of the following statements concerning revocable trusts is correct?

32. A man recently died with only probate assets. Under the terms of his will, he left his entire probate estate out right to his wife.

The following are relevant facts concerning the estate:

Gross estate $2,400,000

Estate administration expenses 85,000

Debts of decedent 100,000

Allowable funeral expenses 10,000

The amount of the allowable marital deduction is

33. A wife makes outright gifts of $40,000 to her son this year, and her husband agrees to split the gifts with her.

Which of the following correctly states the amount of the taxable gifts?

34. A woman is the income beneficiary of an irrevocable trust.

Which of the following powers given to her will cause all the assets in the trust to be includible in her gross estate for federal estate tax purposes?

35. A single man with substantial assets and income is supporting his 80-year-old partially senile mother with monthly cash gifts. He is trying to find a practical way to support his mother while at the same time saving federal gift and income taxes without giving up ultimate control of any assets.

Which of the following courses of action will best accomplish these objectives?

36. An individual who is a resident of State W is also the sole proprietor of a business located in State W. He owns real property located in State X that is used by the proprietorship. While on vacation in State Y, the individual meets an untimely death. Under the terms of his will, his entire estate is bequeathed to a resident of State Z.

Which state will tax the real property used by the proprietorship?

37. Which of the following life insurance settlement options will qualify for the federal estate tax marital deduction?

l. Proceeds left to the surviving spouse under the interest option, with interest payable to the surviving spouse who has the unrestricted right to withdraw proceeds and with any proceeds not withdrawn payable equally to her children per stripes

ll. Proceeds left to the surviving spouse under an installment option, with any installments remaining at her death to be commuted and paid to her estate

38. Which of the following statements concerning a power of appointment is (are) correct?

l. A power of appointment can be designed to restrict the donee’s right to appoint the property in favor of a specific class of recipients.

ll. A power of appointment can be designed to restrict the time period during which the donee may exercise the power.

39. Which of the following statements concerning ante nuptial agreements is (are) correct?

l. They are frequently used to protect the interests of children of former marriages.

II. They can legally deprive a surviving spouse of his or her elective share of a deceased spouse’s estate.

40. Which of the following statements concerning the joint tenancy with right of survivorship form of real property ownership is (are) correct?

l. The property is part of the probate estate of the first tenant to die.

ll. An owner can sell his interest in the property at any time without destroying the form of ownership.

41. A number of states have passed statutes governing “living wills.”

Which of the following statements concerning a living will is (are) correct?

l. A living will is an alternative to an inter vivos trust under certain circumstances.

ll. A living will is an oral will made by the testator during a final illness when it is impossible to write one.

42. Which of the following actions on the part of a trustee is (are) a breach of his duties?

I. Placing substantial amounts of cash from the sale of securities in a no interest bearing checking account for a period of years

II. Investing all trust assets in securities that favor income beneficiaries to the detriment of remainder persons

43. Which of the following are ways of passing property from a deceased spouse to a surviving spouse so that the properly will qualify for the federal estate tax marital deduction?

I. When the surviving spouse receives the property by electing to take against the deceased spouse’s will

ll. When the surviving spouse receives the property as a consequence of the qualified disclaimer of another beneficiary

44. Which of the following statements concerning wills is (are) correct?

l. A will should be reviewed periodically to assure that the property owner’s most recent intentions are honored at death.

ll. Once signed, a will’s provisions may not be changed without the consent of all the beneficiaries under the will.

45. Which of the following statements concerning the generation-skipping transfer tax (GSTT) is (are) correct?

I. An annual exclusion against GSTT will shelter gifts by a grandparent to a trust benefiting multiple grandchildren.

II. Tuition payments made directly by a grandparent to a university for a grandchild’s education are exempt from GSTT.

46. In which of the following situations will the grantor be taxed on income from trust property.

l. The grantor of a trust gives one of the trust beneficiaries the right to add or delete beneficiaries.

ll. An adverse party to the grantor holds the power to determine the timing to trust distributions to the beneficiaries.

47. Which of the following statements concerning a grantor-retained annuity trust (GRAT) is (are) correct?

l. The grantor is taxed on trust income during the retained term.

II. The grantor makes an irrevocable transfer to the remainder person(s) when the trust is created.

48. Alan, a widower, is a retired executive with substantial assets. He wishes to provide for the financial security of his two grandchildren since their father, Alan’s son, has always managed money poorly. This year Alan would like each grandchild to receive a substantial gift.

Which of the following statements concerning the generation-skipping transfer tax (GSTT) on these gifts is (are) correct?

I. Federal estate or gift tax will not be imposed if the gift is otherwise subject to the GSTT.

II. Assuming no prior gifts, Alan can gift a cumulative total of (not including the annual exclusion) $1.5 million to his grandchildren without the imposition of the GSTT.

49. Which of the following statements concerning filing the federal estate tax return is (are) correct?

l. The estate tax return must be filed within 9 months of death unless an extension is granted by the IRS.

ll. For persons dying this year. an estate tax return must be filed for gross estates plus adjusted taxable gifts that exceed $1.5 million.

50. Which of the following statements concerning the gift or estate tax charitable deduction is (are) correct?

l. A donor is denied a charitable deduction for property that passes to a qualified charity as the result of a qualified disclaimer if the donor original transfer was to a no charitable donee.

ll. A decedent-spouse estate may obtain both marital and charitable deductions for interests contributed to a charitable remainder trust when the surviving spouse is the only no charitable income beneficiary for life.

51. Which of the following statements concerning pooled-income funds are correct?

l. The fund contains commingled donations from many sources.

ll. A decedent donation purchases units in the fund which generate income that is paid at least annually to a charity.

52. Which of the following factors is (are) used to make a choice between having an entity-purchase or cross-purchase partnership buy-sell agreement?

I. The cost basis of the partner’s business interests.

ll. The amount of the partner’s individual personal net worth’s

53. Which of the following transfers will be successful in removing property from a grantor’s gross estate?

l. A grantor’s transfer of property to a revocable trust if the grantor lives three years after the transfer.

ll. A grantor’s transfer of a personal residence to a qualified personal residence trust if the grantor survives the retained interest term.

54. Which of the following statements concerning marital transfers to a non-U.S. citizen spouse is (are) correct?

l. A marital deduction is automatically available as long as property is transferred outright to the non-citizen spouse.

Il. A marital deduction is automatically available if the transferor-decedent spouse is a U. S. citizen.

55. Which of the following statements concerning the inclusion in a decedent-employee’s gross estate of a lump-sum distribution from a qualified retirement plan to a beneficiary other than the employee’s estate is (are) correct?

l. Lump-sum distributions of payments attributable to the employer’s contributions are excluded from the gross estate.

ll. Lump-sum distributions of payments attributable to the decedent-employee’s contributions are excluded from the gross estate.

56. John plans to transfer his life insurance policy to an irrevocable trust for the benefit of his 19-yearold daughter, Jane.

Which of the following conditions will enable the gift to qualify for the annual exclusion?

l. Jane is the irrevocable beneficiary of the life insurance trust but cannot withdraw from the trust until the death benefits are paid.

ll. Jane is given “Crummey” demand powers permitting the withdrawal at her discretion of the annual additions to the trust.

57. Which of the following statements concerning the taxation of estates and trusts is (are) correct?

l. They are taxed similarly to partnership entities.

II. They are taxed on distributable net income (DNI) that is retained.

58. Which of the following statements concerning pooled-income funds is (are) correct?

L. A pooled income fund is similar to a mutual fund maintained by a qualified charity.

ll. It is an irrevocable arrangement in which the remainder interest passes to charity.

59. Which of the following statements concerning ownership of property in the form of a joint tenancy with right of survivorship is (are) correct?

I. Either real or personal property may be owned as a joint tenancy with right of survivorship.

Il. Nonqualified joint tenants with right of survivorship may have unequal separate shares of the property.

60. Which of the following statements concerning the methods of valuing a closely held business for federal estate tax purposes is (are) correct?

l. The capitalization-of-adjusted-earnings method uses a capitalization rate that varies inversely with the degree of risk and rate of return.

II. The adjusted-book value method involves adjusting the asset components of a business to an approximate fair market value for each component.

61. Which of the following statements concerning guardians is (are) correct?

l. A guardian is appointed by a court.

Il. A guardian holds equitable title to the property he administers for his or her ward.

62. Which of the following types of partial interests in property may be allowed a charitable deduction for estate tax purposes?

l. A remainder interest in the donor vacation home

ll. A testamentary gift of a percentage of a decedent entire interest in property held in trust

63. A married man is the sole owner of a small business with an estate tax value of $500,000. In addition, he and his wife own an office building as joint tenants with right of survivorship which they purchased five years ago. The building has an estate tax value of $1, 50, 0000. They are considering dissolving the joint tenancy and retitling the building in the name of the husband as sole owner.

Which of the following statements concerning this action is (are) correct?

l. If the husband dies first, it would be easier to qualify his estate for a Section 303 redemption of his business interest.

ll. If the husband dies first; the probate costs of his estate could be increased.

64. Which of the following statements concerning certain types of property interests is (are) correct?

I. The person or entity who has title to the property is the legal owner of the property.

II. The person who has the right to all income earned on the property is the beneficial or equitable owner of the property.

65. The failure of an individual to have a will can result in which of the following?

l. The state will determine the disposition of the individual’s probate estate.

ll. The decedent’s preference for a personal representative, guardian, and other fiduciary’ roles may be ignored.

66. Losses resulting from which of the following occurrences constitutes a permissible deduction from a decedent’s gross estate to determine the adjusted gross estate?

l. Unreimbursed losses of estate assets due to theft.

Il. Unreimbursed losses of estate assets due to a storm.

67. Transactions involving a taxable gift include which of the following?

I. A father bought real estate, paid the entire $180,000 purchase price, and titled it jointly with his son with right of survivorship.

ll. A father deposited $50,000 in a bank account titled jointly with his daughter with right of survivorship and died before any funds were withdrawn from the account.

68. A man established and funded an irrevocable trust and named a bank as trustee. All income from the trust is to be paid to his four grandchildren.

Which of the following powers retained by the grantor of the trust will cause all or a portion of the trust assets to be includible in his gross estate for federal estate tax purposes?

l. The power to add principal to the trust

II. The power to vary the amounts of trust income paid to each grandchild

69. Which of the following statements concerning federal gift, estate, and income taxes is (are) correct

I. A taxable gift of income-producing property automatically transfers income tax liability to the donee.

II. The value of gifts made within 3 years of death cannot be brought back into the donor’s gross estate.

70. Which of the following provisions is (are) generally common to all buy-sell agreements?

l. Provisions specifying how the purchase price is to be funded.

II. Statement indicating the purpose of the agreement.

71. A wife owns a $100,000 life insurance policy on her husband’s life. She has named her son the revocable beneficiary.

Which of the following statements concerning the life insurance is (are) correct?

l. At the husband’s death, the interpolated terminal reserve of the policy is a gift to the son.

II. The annual increase in the cash value is a gift to the son.

72. A father plans to create a trust for the benefit of his 22-year-old son and wishes to take advantage of the gift tax annual exclusion. He has named a bank as trustee.

Which of the following trust provisions would cause the gifts to be ineligible to qualify for the gift tax annual exclusion?

l. The trust income is to be paid to the son or accumulated at the discretion of the trustee.

II. The income is to be accumulated until the son reaches age 32 when all accumulated income and principal are to be distributed to him.

73. Which of the following statements concerning the federal income taxation of estates is (are) correct?

I. An estate is entitled to a personal exemption of $300 and a standard deduction.

ll. An estate is entitled to a tax deduction for amounts of income distributed.

74. All the following factors are important in assessing liquidity needs in estate planning EXCEPT the

75. All the following statements concerning a federal estate tax deduction for a bequest or gift to a qualified charily are correct EXCEPT:

76. All the following statements concerning an entity-purchase buy-sell agreement for a partnership are correct EXCEPT:

77. To determine whether a taxable gift has been made, the IRS focuses on all the following factors

EXCEPT:

78. Ignoring the annual per-donee exclusion, all the following transfers are gifts for federal gift tax purposes EXCEPT:

79. All the following statements concerning property ownership by a married couple residing in a community-property state are correct EXCEPT:

80. All the following powers held by the grantor of an irrevocable trust will cause the trust assets to be brought back into the estate of the grantor EXCEPT the power to:

81. A father wants to accumulate funds for his 12-year-old son’s college education. On the advice of his attorney, the father establishes an IRC Section 2503(c) trust and funds it with annual gifts. All the following statements concerning this arrangement are correct EXCEPT:

82. Believing that his death was imminent, a widower gave his son some real estate two years ago, and

filed a timely gift tax return. The widower died on January 1st of this year.

Additional facts are:

Widower’s basis in the real estate $150,000

Value of real estate when gifted 400,000

Value of real estate on date of death 800,000

Amount of gift tax paid by widower 121,600

Assuming the widower made no additional gifts to his son, all the following statements concerning this situation are correct EXCEPT:

83. All the following statements concerning the ownership of real property as joint tenants with right of survivorship are correct EXCEPT:

84. All the following statements concerning transfers at death under a will are correct EXCEPT:

85. Income earned but unpaid at the time of a decedent’s death is deemed to be income in respect of a decedent (IRD). All the following statements concerning IRD are correct EXCEPT:

86. All the following statements concerning the generation-skipping transfer tax (GSTT) are correct

EXCEPT:

87. All the following are steps in calculating a decedent’s maximum estate tax marital deduction EXCEPT:

88. All the following statements concerning real property ownership by married couples as joint tenants with right of survivorship are correct EXCEPT:

89. All the following statements concerning installment sale tax treatment are correct EXCEPT:

90. Tax benefits of making life time gifts in excess of the gift tax annual exclusion include all the following

EXCEPT:

91. All the following statements concerning a typical pour-over trust are correct EXCEPT:

92. All the following will be brought back into the donor’s gross estate for federal estate tax purposes EXCEPT:

93. Limited interests in property include all the following EXCEPT:

94. All the following are grounds for contesting a will EXCEPT: