Question;2200. Question MC #1;Which, if any, of the following is not;a characteristic of the Federal gift tax?;a.;The alternate valuation date of ? 2032 can be elected.;b. A charitable deduction is available.;c. A disclaimer procedure may avoid the;tax.;d. A marital deduction is available.;e. None of the above.;2201. Question MC #2;Which, if any, of the following is not;a characteristic of the Federal estate tax?;a.;A foreign tax credit is available.;b. A credit for tax on prior transfers;may be available.;c. Pre-1977 taxable gifts need to be;considered.;d. A charitable deduction is available.;e. None of the above.;2202. Question MC #3;Which of the following is not a;characteristic of both the Federal;gift tax and the Federal estate tax?;a.;A charitable deduction is available.;b. A deduction for state death taxes may;be available.;c. A marital deduction is available.;d. An exclusion amount is available in;computing the tax.;e. None of the above.;2203. Question MC #4;In determining the Federal gift tax on a current gift;a.;Disregard taxable gifts made after 1976.;b. Disregard taxable gifts made before;1977.;c. Include all prior gifts.;d. Claim a credit only for the gift;taxes actually paid.;e. None of the above.;2204. Question MC #5;Concerning the formula for the Federal estate tax;a.;The tax base results after any post-1976 taxable gifts are subtracted from the;taxable estate.;b. The taxable estate is determined;without reduction for any state death taxes paid.;c. Income tax owed by the decedent at;the date of death is deducted in arriving at the taxable estate.;d. A separate $5 million exclusion;amount is available for each of the Federal gift tax, estate tax, and;generation-skipping tax.;e. None of the above statements is true.;2205. Question MC #6;In which of the following situations is Polly?s property ownership interest not lost by her prior death?;a.;Tenancy by the entirety.;b. Tenancy in common.;c. Joint tenancy.;d. Life estate in an irrevocable trust.;e. Annuitant in a straight-life annuity;2206. Question MC #7;Which, if any, of the following items is subject to indexation (adjusted to;reflect inflation)?;a.;Monetary amount required to elect the alternate valuation date under ? 2032.;b. Unified transfer tax credit.;c. Unified transfer tax rates.;d. Annual exclusion.;e. Choice b. and d. but not a. and c.;2207. Question MC #8;Which, if any, of the following statements correctly;reflects the rules applicable to the alternate valuation date (i.e.;2032)?;a.;The election is made by the executor.;b. Can be elected even though no estate;tax return (i.e., Form 706) has to be filed.;c. Can be elected only if it reduces the;amount of the gross estate or reduces;the estate tax liability.;d. Its election does not affect the;income tax basis of property included in the gross estate.;e. None of the above.;2208. Question MC #9;In which, if any, of the following independent situations can the alternate;valuation date be elected?;Value of Gross Estate Estate;Tax Result;Date of Alternate Date of;Alternate;Death Date;Death Date;a.;$6,000,000;$6,100,000;$400,000;$390,000;b. $5,900,000 $5,800,000 $400,000 $380,000;c. $6,100,000 $6,000,000 $390,000 $400,000;d. $6,200,000 $6,300,000 $500,000 $490,000;e. None of the above;2209. Question MC #10;At the time of his death, Trent owned some common stock.;Date of Death;Value;Six;Value;Months;Later;Agua Corporation;$1,500,000;$1,100,000;Orange Corporation;1,300,000;1,400,000;The Aqua Corporation stock is sold by the executor of the estate seven months;after Trent?s death for $1,300,000. If the alternate valuation date is properly;elected, the value of Trent?s estate as;to these stocks is;a.;$2,300,000.;b. $2,400,000.;c. $2,500,000.;d. $2,700,000.;e. None of the above.;2210. Question MC #11;In which, if any, of the following independent situations has Jean made a gift?;a.;Jean gives her 19-year old son $20,000 to be used by him for his college;expenses.;b. Jean buys her grandfather a new;$120,000 RV for his birthday.;c. Jean sends $14,000 to Temple;University to cover her nephew?s tuition. The nephew does not qualify as Jean?s;dependent.;d. Jean contributes $10,000 to her;Congressman?s reelection campaign.;e. None of the above.;2211. Question MC #12;In which, if any, of the following independent situations has Fred made a gift?;a.;Fred established a revocable trust, income payable to himself for life and;upon his death, remainder to his children.;b. Fred dies owning a U.S. savings bond;with ownership listed as: ?Fred, payable to Sue on Fred?s death.? Sue redeems;the bond.;c. Fred sends $25,000 to Alice?s oral;surgeon in payment of her dental implants. Alice is Fred?s sister and does not;qualify as his dependent.;d. Fred pays Eva $800,000 in a property;settlement of her marital rights. One month later Fred and Eva are divorced.;e. None of the above.;2212. Question MC #13;In which of the following situations has a gift occurred?;a.;Heidi creates a revocable trust, income payable to herself, remainder to her;children.;b. Herman establishes a joint savings;account with his sister.;c. After Herman?s death, his sister;withdraws the funds he placed in their joint savings account.;d. The day before their marriage, Eva;gives Arlan $500,000 in securities.;e. None of the above.;2213. Question MC #14;Stacey inherits unimproved land (fair market value of $6 million) from her;father on June 1, 2010. Martha disclaims her interest in the property as;follows: one-third on December 1, 2010, one-third on January 3, 2011, and the;remaining one-third on May 31, 2011. In all cases, the disclaimers pass the;interest to her son (the next heir under state law). The Federal gift tax;applies to Stacey for;a.;All of the disclaimers.;b. The disclaimer made in 2010.;c. The disclaimers made in 2011.;d. The May 31, 2011 disclaimer.;e. None of the disclaimers.;2214. Question MC #15;Before his;nephew (Dean) leaves for college, Will loans him $400,000. Dean signs a note;promising to repay the loan in five years. No interest element is provided.;Which, if any, of the following is a tax consequence of this arrangement?;a.;Will has not made a gift to Dean of the interest element.;b. Will has an interest expense;deduction as to the interest element.;c. Dean has interest income as to the;interest element.;d. Dean may be allowed an income tax;deduction as to the interest element.;e. None of the above.;2215. Question MC #16;Which of the following statements relating to the Federal gift tax is incorrect?;a.;The deemed paid credit allowed for a prior taxable gift cannot be less than the;gift tax that was actually paid.;b. The issuance of an effective;disclaimer by an heir will pass the property to another without being subject;to the Federal gift tax.;c. The annual exclusion is not available;for gifts of future interests.;d. Up to 5 years of annual exclusions;can be available for gifts involving ? 529 plans (qualified tuition programs).;e. None of the above.;2216. Question MC #17;Concerning the election to split gifts under ? 2513, which of the following;statements is incorrect?;a.;The election can be made even if the parties are not married for the entire;year of the gift.;b. The election does not take into;account any prior taxable gifts made by either spouses.;c. The election doubles the number of;annual exclusions available.;d. The election has utility in a;community property jurisdiction.;e. The election can be made even if the;parties are divorced as long as neither spouse has remarried by the end of the;year.;2217. Question MC #18;Which, if any, of the following is a correct;statement regarding the filing of a gift tax return (Form 709)?;a.;A donor must file a Form 709 in the same year in which the gift was made.;b. The due date of a Form 709 is the;same as the due date of the donor?s Form 1040.;c. A Form 709 may have to be filed even;though the value of the gift was less than the amount of the annual exclusion.;d. Melody gives her husband a new;Mercedes convertible for his birthday. Melody must file a Form 709 to report;the gift even though no gift tax results.;e. None of the above.;2218. Question MC #19;Mark dies on March 3, 2011. Which, if any, of the following items is not included in his gross estate?;a.;Interest earned (after death) on City of Cleveland bonds.;b. Cash dividend on stock owned by;Mark?declaration date was February 4, 2011, and record date was March 2, 2011.;c. Federal income tax refund for;2010?received on March 4, 2011.;d. Insurance recovery on auto accident;that occurred on February 25, 2011.;e. Insurance recovery from theft of;sailboat on March 1, 2011.;2219. Question MC #20;Andrea dies on April 30, 2011. Which, if any, of the following items is included in her gross estate?;a.;Rents for the month of May (received on May 2) on an apartment building she;owned. The alternate valuation date of ? 2032 is not elected.;b. Rents for the month of May (received;on May 2) on an apartment building she owned. The alternate valuation date of;2032 is elected.;c. Insurance recovery from a fire which;occurred on November 1, 2010, and destroyed Andrea?s residence.;d. A loan made by Andrea to her daughter;(who is a successful dentist) and forgiven by Andrea in her will.;e. Choices c. and d. but not a. and b.;2220. Question MC #21;At the time of his death, Norton was involved in the following transactions.;?;Owned land in joint tenancy with Emily. The land;is worth $600,000 and was purchased by Emily 20 years ago for $150,000.;?;Owned land in a tenancy by the entirety with Amy.;The land is worth $800,000 and was purchased by Amy five years ago for;$450,000.;?;Owned land in an equal tenancy in common with;Noah. The land is worth $400,000 and was purchased by Norton four years ago;for $300,000.;?;Owned City of Dayton bonds worth $500,000.;What amount is included in Norton?s gross estate?;a.;$700,000.;b. $900,000.;c. $1,100,000.;d. $1,500,000.;e. None of the above.;2221. Question MC #22;At the time of her death on October 4, 2011, Kaitlyn was involved in the;following transactions.;?;Was the sole life beneficiary of a trust (assets;worth $2 million) created 10 years ago by Paul (Kaitlyn?s husband). The;transfer was by gift of securities then worth $500,000 (Paul made a QTIP;election). Paul and Kaitlyn?s children are the remainder persons.;?;Owned stock in Mauve Corporation (basis of;$800,000 and fair market value of $1 million). On September 8, 2011, a;dividend of $48,000 was declared on the stock payable to all shareholders on;record as of October 3, 2011. The $48,000 was received by Kaitlyn?s executor;on October 20, 2011.;?;Kaitlyn made a taxable gift of $400,000 in 2002.;As to these transactions, Kaitlyn?s gross estate includes;a.;$3,048,000.;b. $3,000,000.;c. $1,448,000.;d. $1,048,000.;e. None of the above.;2222. Question MC #23;At the time of;his death, Jason was a participant in Silver Corporation?s qualified pension;plan and group term life insurance. The balance of the survivorship feature in;his pension plan is;Contributions by Silver;$800,000;Contributions by Jason;400,000;Plan earnings;300,000;The term;insurance has a maturity value of $100,000. All amounts are paid to Pam;Jason?s daughter. One result of these transactions is;a.;Pam must pay income tax on $300,000.;b. Pam must pay income tax on;$1,500,000.;c. Jason?s gross estate must include;$1,100,000.;d. Jason?s gross estate must include;$1,600,000.;e. None of the above.;2223. Question MC #24;Prior to his death in 2011, Alma made the following gifts.;Fair;Market Value;Year;Asset;Date;of Gift;Date;of Death;2007;Marketable securities;$400,000;$900,000;2009;Term life insurance policy;?0?;100,000;2010;Unimproved land;900,000;950,000;As a result of the 2010 transfer, Alma paid a gift tax of $70,000. As to these;transactions, Alma?s gross estate includes;a.;$0.;b. $70,000.;c. $100,000.;d. $170,000.;e. $1,120,000.;2224. Question MC #25;In 2009, Glen transferred several assets by gift to different persons. Glen;dies in 2011. Information regarding the properties given is summarized below.;Fair;Market Value;Date;of Gift;Date;of Death;Insurance policy on Glen?s life;$ 20,000;$200,000;Unimproved land;890,000;900,000;Stocks and bonds;600,000;800,000;The transfer;of the land and the stocks and bonds resulted in a total gift tax of $60,000.;As to these transactions, Glen?s gross estate must include;a.;$0.;b. $200,000.;c. $260,000.;d. $1,900,000.;e. $1,960,000.;2225. Question MC #26;At the time of his death, Lance held a life estate in the LM Trust. Under which;of the following circumstances will the LM Trust be included in his gross;estate?;a.;The trust was created by Lance?s deceased wife and the executor of her estate;did not make a QTIP election.;b. The trust was created by Lance?s;father.;c. The trust was created by Lance and is;irrevocable.;d. The trust was created by Lance and was revocable. He released the power to;revoke four years before his death.;e. Choices c. and d. but not a. and b.;2226. Question MC #27;At the time of her death, Megan was involved in the following.;?;Owned an insurance policy on the life of her;father with a replacement cost of $250,000 and maturity value of $800,000.;The designated beneficiary of the policy is Megan?s estate.;?;Was an equal tenant in common with her brother in;a tract of land worth $800,000. The land was inherited from their grandmother;10 years ago when it had a value of $200,000.;?;Was a joint tenant with her two sisters in stock;worth $1,500,000. The stock was inherited from their grandmother 10 years ago;when it had a value of $500,000.;As to these transactions, Megan?s gross estate must include;a.;$250,000.;b. $1,150,000.;c. $1,400,000.;d. $2,150,000.;e. None of the above.;2227. Question MC #28;In 1980, Mandy and Hal (mother and son) purchased land for $600,000 as joint;tenants with right of survivorship. Of the $600,000 purchase price, Mandy;provided $300,000 and Hal $300,000 (of which $200,000 had been received as a;gift from Mandy). In 2011, Hal dies first when the land is worth $3,000,000. As;to the land, Hal?s gross estate must include;a.;$500,000.;b. $1,500,000.;c. $2,500,000.;d. $3,000,000.;e. None of the above.;2228. Question MC #29;In 1995, Thalia purchases land for $900,000 and lists title in the names of her;daughters as follows: ?April and Theresa, joint tenants with right of;survivorship.? In 1999, April and Theresa purchase an apartment building for $1;million as equal tenants in common, April furnished $400,000 and Theresa;furnished $600,000 of the cost. In the current year, April dies first in 2011;when the land is worth $1.5 million and the apartment building is worth $2;million. One of the results of these transactions is;a.;April made a gift to Theresa of $100,000 in 1999.;b. None of the land is included in;April?s gross estate.;c. April?s gross estate includes;$800,000 (40% ? $2 million) as to the apartment building.;d. April?s gross estate includes;$1,750,000 as to these properties.;e. None of the above.;2229. Question MC #30;Tom and Jean are husband and wife and live in California. In 1991, they use;$400,000 of community funds to purchase an annuity from an insurance company.;Under the terms of the contract, Tom is to receive $40,000 per year for life;once he reaches age 65. If Jean outlives Tom, she is to receive $30,000 per;year for life. Tom dies first in 2011 (and before reaching age 65). At this;time, the value of Jean?s interest is $500,000. As to this contract, Tom?s;gross estate includes;a.;$0.;b. $200,000.;c. $250,000.;d. $500,000.;e. None of the above.;2230. Question MC #31;Don and Roxana are husband and wife and live in a common law state. Pursuant to;the estate tax rules applicable to annuities (? 2039), which of the following;is not a correct statement?;a.;Don has a straight-life unmatured annuity. Upon his death, none of the annuity;is included in his gross estate.;b. Don?s retirement plan, to which his;employer contributed 50%, is in the form of an annuity with a survivorship;feature covering Roxana. Upon Don?s prior death, 50% of the value of the;survivorship feature is included in his gross estate.;c. Don has an annuity with a;survivorship feature covering Roxana and to which she contributed 50% of the;premiums. Upon Don?s prior death, only 50% of the value of the survivorship;feature is included in his gross estate.;d. Don has an annuity with a;survivorship feature covering Roxana. If Roxana dies first, nothing regarding;the annuity is included in her gross estate.;e. None of the above statements are;false.;2231. Question MC #32;Matt and Patricia are husband and wife and live in Oregon. In 1980 and using;her funds, Patricia purchases a residence for $400,000, listing title to the;property as ?Matt and Patricia, joint tenants with right of survivorship.? In;2011, Matt dies first when the residence is worth $2 million. A correct statement as to these;transactions is;a.;In 2011, Matt?s gross estate includes $1 million and a marital deduction of $1;million is allowed for estate tax purposes.;b. In 1980, Patricia made a gift to Matt;but no marital deduction is available for gift tax purposes.;c. In 1980, Patricia did not make a gift;to Matt.;d. In 2011, Matt?s estate includes;nothing as to the property.;e. None of the above.;2232. Question MC #33;Gerald and Pat are husband and wife and live in New York. Using joint funds, in;1990 they purchase an insurance policy on Gerald?s life and designate their;daughter, Marie, as the beneficiary. The policy has a maturity value of;$4,000,000. Gerald dies first in 2011 and the insurance proceeds are paid to;Marie. As to the proceeds;a.;Gerald?s taxable estate includes $0, and no other tax consequences ensue.;b. Gerald?s taxable estate includes $4,000,000.;c. Gerald?s taxable estate includes;$2,000,000, and Pat makes a gift to Marie of $2,000,000.;d. Gerald?s taxable estate includes $0;and Pat makes a gift of $4,000,000 to Marie.;e. None of the above;2233. Question MC #34;Homer and Laura are husband and wife. At the time of Homer?s prior death in;2011, they owned the following: land as tenants by the entirety worth;$2,000,000 (purchased by Homer) and stock as equal tenants in common worth;$3,000,000 (purchased by Laura). Laura also owns an insurance policy on Homer?s;life (maturity value of $1,000,000) with herself as the designated beneficiary.;Homer?s will passes all his property to Laura. How much marital deduction is;allowed Homer?s estate?;a.;$2,000,000.;b. $2,500,000.;c. $3,500,000.;d. $4,500,000.;e. None of the above.;2234. Question MC #35;In 1985, Drew creates a trust with $1,000,000 of securities. Under the terms of;the trust, Paula (Drew?s wife) is granted a life estate with remainder to their;children. Drew makes a QTIP election as to the trust. Drew dies in 1992 when;the trust is worth $1,500,000, and Paula dies in 2011 when the trust is worth;$2,000,000. Which, if any, of the following is a correct statement?;a.;The trust is included in Drew?s gross estate when he dies in 1992.;b. None of the trust is included in;Paula?s gross estate when she dies in 2011.;c. Drew gets a marital deduction in;1985.;d. Only $1,000,000 of the value of the;trust is included in Paula?s gross estate when she dies in 2011.;e. None of the above.;2235. Question MC #36;June made taxable gifts as follows: $400,000 in 1973, $200,000 in 1977;$600,000 in 1985, and $700,000 in 2001. In 2011, June dies leaving a taxable;estate of $4,000,000. June?s tax base for applying the unified tax rate;schedules (for estate tax purposes) is;a.;$4,000,000.;b. $4,500,000.;c. $5,300,000.;d. $5,500,000.;e. None of the above.;2236. Question MC #37;Regarding the transfer tax credits available, which of the following statements;is correct?;a.;For 2010, the gift tax and estate tax credits are the same amount.;b. For 2009 and 2010, the gift tax;credit is not the same amount for;both years.;c. For 2011, the gift tax and estate tax;credits are not the same amount.;d. For 2013, the scheduled credits for;gift and estate taxes will not be the;same amount.;e. None of the above.;2237. Question MC #38;Pursuant to Corey?s will, Emma (Corey?s sister) inherits his property. Emma;dies later. The estate tax attributable to the inclusion of the property in;Corey?s gross estate was $300,000. The estate tax attributable to the inclusion;of the property in Emma?s gross estate is $400,000. Emma?s credit for the tax;on prior transfers (under? 2013) is;a.;$0 if Emma died 9 1/2 years after Corey.;b. $32,000 if Emma died 3 years after;Corey.;c. $40,000 if Emma died 1 year after;Corey.;d. $24,000 if Emma died 5 1/2 years;after Corey.;e. None of the above amounts is correct.
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