HS-330 Online Practice Questions and Answers

Which of the following statements concerning the inclusion and valuation of all or part of a commercial annuity in the estate of an annuitant is (are) correct?

-A life annuity with a period certain is includible to the extent of the present value of any remaining guaranteed payments.

-

If the executor elects the alternate valuation date, an annuity is includible at its replacement cost 6 months after death.

A.

Neither 1 nor 2

B.

Both 1 and 2

C.

2 only

D.

1 only

All the following statements concerning an estate for a term of years are correct EXCEPT:

A. An interest may extend beyond the lifetime of the grantor.

B. The tenant may transfer the property at the end of the term of his interest.

C. It is an interest in property established for a specific duration.

D. The tenant has the right to possess the property during the term of his interest.

A married man died this year leaving a gross estate of $2,700,000. Some additional facts concerning his estate are:

-Administration expenses and debts $300,000

-Marital deduction 800,000

-

Applicable credit amount (2005) 555,800

-

Applicable exclusion amount (2005) 1,500,000

-

State death taxes payable 17,700

A.

$47,065

B.

$42,865

C.

0

D.

$37,035

Tax benefits of making lifetime gifts in excess of the gift tax annual exclusion include all the following EXCEPT:

A. Gift taxes are payable at the same tax rate as estate taxes.

B. Income taxes can be saved if a high-income donor gives income-producing property to a low- income donee.

C. The gift tax paid on a gift made more than 3 years prior to the death of the donor avoids inclusion the donor's gross estate.

D. Appreciation in the value of a gift of real property after the date of the gift increases the donor's federal estate tax liability.

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?

1.

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

2.

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

A. Both 1 and 2

B. 1 only

C. 2 only

D. Neither 1 nor 2

To determine whether a taxable gift has been made, the Treasury Regulations require that there must initially be a definite finding that the

A. donor was a close friend or a relative of the donee

B. property was transferred for less than an adequate and full consideration in money or money's worth

C. transferor's actual state of mind was such that he intended to make a gift

D. property transferred was real property or tangible personal property

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

1.

A remainder interest in the donor vacation home

2.

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

A. Both 1 and 2

B. Neither 1 nor 2

C. 1 only

D. 2 only

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

A. Two brothers own equal amounts of all the common stock in a corporation, the only asset of which is real property.

B. Two brothers are equal partners in a general partnership that owns a piece of real property used in the partnership business.

C. Two brothers own equal fractional interests in a piece of real property and at the death of one of the brothers the survivor will own the entire piece of property.

D. Two brothers own equal undivided interests in a piece of real property, with each brother being able to divest himself of his interest by sale, gift, or will.

The failure of an individual to have a will can result in all the following EXCEPT:

A. Testamentary gifts to charity cannot be made.

B. The decedent's state of domicile might receive the property left by the decedent.

C. Unnecessary death taxes may be imposed.

D. A surviving spouse receives only his or her elective share.

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?

1.

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

2.

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

A. 2 only

B. 1 only

C. Neither 1 nor 2

D. Both 1 and 2

The primary objective in estate planning is to

A. preserve the marital deduction and applicable credit amount credit

B. reflect accurately the client's wishes concerning the disposition of his or her wealth

C. reduce estate taxes to the lowest amount possible

D. prevent the intestate distribution of assets

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 $150,000

-Furniture and fixtures 75,000

-Listed common stock 300,000

-

Other securities 200,000

A.

$400,000

B.

$825,000

C.

$600,000

D.

$500,000

Harry, Barry, and Carrie incorporated their business, HBC and received 150 shares of stock each. They entered into a cross-purchase buy-sell agreement at this time. The agreement binds their estates to sell their shares of stock to the surviving shareholders. Each shareholder also agrees to purchase one-half of the shares held by the estate of the deceased shareholder. Assume Barry dies sometime later. Which of the following statements concerning this arrangement is (are) correct?

1.

When the agreement is carried out, HBC will have 300 shares of stock outstanding.

2.

Barry's estate will have additional liquidity to meet expenses and distribution requirements.

A. 2 only

B. Both 1 and 2

C. 1 only

D. Neither 1 nor 2

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

1.

Unreimbursed losses of estate assets due to theft.

2.

Unreimbursed losses of estate assets due to a storm.

A. Both 1 and 2

B. Neither 1 nor 2

C. 2 only

D. 1 only

Which of the following statements concerning the estate tax marital deduction is correct?

A. The marital deduction available to a decedent in a community-property state is equal to the total amount of community property.

B. The marital deduction available to a decedent in a common-law state is equal to the net amount of qualifying property passing to the surviving spouse.

C. The marital deduction available to a decedent in a common-law state is limited to a maximum of $1 million.

D. The marital deduction available to a decedent in a common-law state is equal to one half the adjusted gross estate.