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A stock redemption to pay death taxes under Sec.303 is generally treated as


A) a sale or exchange of property.
B) a dividend.
C) a return of capital.
D) ordinary income.

E) A) and B)
F) A) and C)

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Julian died on November 1 and owned 100 shares of a New York Stock Exchange stock.The stock traded at a high of 100 and a low of 98 on November 1.It opened at 98 and closed at 100.On Julian's estate tax return,what will the per-share and total value of the stock be?

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($100 + 98)/2 = $99 ...

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Identify which of the following statements is false.


A) Every grantor is entitled to a $5.25 million exemption from the GSTT in 2011.
B) If Greg transfers assets directly to his grandson,this transaction would be an example of a direct skip.
C) If Shaad transfers property in trust to his son,with the remainder to his grandson,at the death of the son a taxable termination will result.
D) The GSTT is levied at a flat rate,which is higher than the top rate under the estate tax rate schedule.

E) C) and D)
F) B) and C)

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Which of the following is not a credit for purposes of computing the federal estate tax liability?


A) credit for gift tax paid on pre-1977 gifts
B) credit for estate taxes paid on certain prior transfers
C) a credit for foreign death taxes
D) All of the above are credits for the federal estate tax.

E) A) and B)
F) A) and C)

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Identify which of the following statements is false.


A) Special use valuation is available for farmland to help alleviate liquidity problems.
B) The transferee is liable for the generation-skipping transfer tax (GSTT) in the case of a direct skip.
C) The generation-skipping transfer tax (GSTT) is imposed to assure that some form of transfer taxation is imposed once a generation.
D) A direct skip skips one or more generations.

E) All of the above
F) None of the above

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Michael Moriarty,a widower,is quite elderly and is beginning to do some estate planning.His goal is to reduce his transfer taxes.He is considering purchasing land with a high potential for appreciation and owning it with his grandson as joint tenants with rights of survivorship.Michael would provide all of the consideration,estimated to be about 11.5 million.What tax issues should Michael Moriarty consider with respect to the purchase of the land?

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•Does Michael make a gift when he purcha...

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One of the major problems facing executors in managing the estate is


A) identifying deductions.
B) liquidity.
C) the unified credit computation.
D) determining the method to value assets.

E) A) and D)
F) A) and B)

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A special power of appointment exists if the holder can exercise the power in favor of himself or herself,his or her creditors,or the creditors of his or her estate.

A) True
B) False

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Identify which of the following statements is false.


A) To qualify for the marital deduction,property must be includible in the decedent's gross estate.
B) Property is not eligible for the marital deduction if it passes to the spouse under the individual's dower rights.
C) A terminable interest is one that ceases upon the passage of time or the occurrence of some event.
D) Some,but not all,terminal interests qualify for the marital deduction.

E) None of the above
F) B) and C)

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Explain why living trusts are popular tax-planning vehicles.

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Revocable trusts,sometimes called living...

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On March 1,Sue transfers stock worth $20,000 to Frank.How long must Sue live to avoid inclusion of the $20,000 of stock in her gross estate?


A) six months
B) one year
C) three years
D) No minimum time period exists,but she must be alive at transfer of ownership.

E) None of the above
F) A) and B)

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Identify which of the following statements is true.


A) The period for payment of estate taxes may be extended if the executor shows "reasonable cause" for not being able to pay some,or all,of the estate tax liability on the regular due date.
B) The estate tax on interests in certain closely held businesses may be paid in installments over a 15-year period if elected.
C) An executor may elect to postpone payment of the estate tax attributable to a remainder or reversionary interest until eight months after the interests of the other person(s) terminate.
D) All of the above are false.

E) All of the above
F) C) and D)

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The gross-up rule requires


A) all beneficial interests be included in the decedent's estate.
B) post-1976 gifts by the decedent be included in the decedent's estate.
C) certain gifts made by the decedent within three years of the date of death are included in the decedent's gross estate.
D) gift taxes on gifts made by the decedent or the decedent's spouse that are paid by the decedent or his estate during the three-year period ending with the decedent's date of death must be included in the decedent's gross estate.

E) B) and C)
F) A) and D)

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The estate tax is a wealth transfer tax.

A) True
B) False

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Appraisal methods used to value real estate for estate tax purposes may include


A) comparable sales.
B) reproduction cost.
C) capitalization of earnings.
D) all of the above

E) All of the above
F) C) and D)

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In 2000,Mike transfers $100,000 of leased land to a trust.The trust income is payable to Mike's son for 13 years,after which time the land is to revert to Mike.This year,Mike dies when the land is valued at $210,000.The applicable federal rate is 10%,and the reversionary actuarial factor is 0.30.How much of the trust value must be included in Mike's estate?

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0.30 × $21...

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Discuss some of the factors to be considered in determining the amount of property that should pass under the marital deduction.

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Except in small estates,an amount equal ...

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The alternate valuation date can be elected for estate tax purposes only if the election


A) increases the value of the gross estate.
B) decreases the value of the gross estate.
C) decreases the estate tax liability (after reduction for tax credits) .
D) Both B and C are required.

E) A) and D)
F) B) and D)

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Lily dies early in the current year.All her property passes subject to her will,which provides that her surviving husband,Rick,is to receive all the property outright.Her will further states that any property Rick disclaims will pass instead to their children in equal shares.Lily's gross estate is about $5 million,and her Sec.2053 deductions are very small.Rick,who is in poor health,already owns about $3 million of property.What tax issues should Rick consider with respect to the property bequeathed to him by his wife?

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•Should Rick consider making a disclaime...

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A terminable interest is one that ceases upon the passage of time or the occurrence of some event.

A) True
B) False

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