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Which of the following statements concerning revocable trusts is correct?

A. Property of a revocable trust will be included in the grantor's probate property.

B. A transfer of income-producing property to a revocable trust will result in favorable income tax treatment for the grantor.

C. A transfer of property to a revocable trust is treated as a completed gift.

D. The transfer of property to a revocable trust is typically motivated by nontax reasons.

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

A. Income earned by one spouse becomes community property.

B. All property that is not separate property is community property.

C. Property inherited during the marriage is the separate property of the spouse who inherited it.

D. Community property loses its identity when a community-property couple moves to a common- law state.

Nontax benefits of lifetime gifts include all the following EXCEPT to

A. reduce probate and administrative costs

B. avoid claims of creditors evidenced by liens

C. provide for the education of the donee

D. obtain privacy that is not possible to obtain through testamentary transfers

The decedent, Z, died this year. The facts concerning Z estate are:

-Gross estate $3,200,000

-Marital deduction $1,100,000

-Charitable deduction 80,000

-Gifts made after 1976 115,000

-

State death taxes payable 215,000

A.

$1,805,000

B.

$1,920,000

C.

$1,590,000

D.

$1,690,000

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 IRC Section 6166. Which of the following statements concerning this deferral of federal estate tax is correct?

A. The interest rate on the deferred tax is determined by the prime rate in effect on the date of death.

B. The interest on the unpaid estate tax is payable over the first 10 years, after which the tax plus interest on the balance is payable in equal installments for the last 5 years.

C. To qualify for the tax deferral, the closely held business must represent more than 50 percent of the value of the decedent's adjusted gross estate.

D. Under certain circumstances, the estate will forfeit its right to tax deferral, and all the remaining unpaid estate tax will become due and payable immediately.