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Louise, who died in January 2011, was survived by...

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Louise, who died in January 2011, was survived by her husband, Larry. Louise?s gross estate was equal to $6,000,000 on the date of death. When Louise died, Louise and Larry owned an undeveloped parcel of real estate in Ocala. The fair market value of the land on the date of Louise's death was $750,000. Larry provided all of the consideration for the purchase of the land, paying $200,000 for it in 2009. Alternate valuation is not available to Louise?s estate as all assets owned by Louise will pass, either under Louise?s last will and testament or by operation of law, to Larry and hence, no estate tax will due because of the marital deduction. What is the amount, if any, includible in Louise's gross estate for federal estate tax purposes with respect to the land? Answer A. 0. B. $200,000. C. $375,000. D. $750,000. 1 points Question 2 Under Carl's will, Carl created a testamentary trust to be funded with $700,000 worth of assets. All of the income of the trust is payable to Carl?s child, Jane, for her life, and thereafter, the remaining assets of the trust will pass to The Public Charity. Jane is serving as the trustee. In addition, the trustee has the discretion to distribute all or such portion of the principal as the trustee shall determine for Jane?s heath, support, and maintenance. Jane?s father, Carl, died during the current taxable year with a gross estate of $5,350,000. Carl?s spouse died in 1985 and no estate tax return was due at her death. Which of the following statements is accurate with respect to the federal estate tax? Answer A. The estate tax charitable deduction is available to Carl?s estate for the assets passing to The Public Charity. B. Jane powers with respect to the assets of the trust constitute a general power of appointment. C. Carl?s estate is not required to file Form 706, the Federal Estate and Generation-Skipping Tax Return. D. When Jane dies, her right to trust income for life will not cause inclusion of the assets in her gross estate. 1 points Question 3 At the time of his death, Nick owned the following property: ? Land held by Nick and his sister Ellen, as joint tenants with right of survivorship. The fair market value of the land on the date of Nick?s death was $600,000, and the land was purchased by Nick for himself and his sister 20 years before his death for $150,000. ? Land held by Nick and Amy as tenants by the entirety. The fair market value of the land on the date of Nick?s death was $800,000, and the land was purchased by Amy for Nick and Amy five years before Nick?s death for $450,000. ? A one-half undivided interest in land held with Lance as tenant in common. The fair market value of the land on the date of Nick?s death was $400,000, and the land was purchased by Lance for Nick and Lance four years before Nick?s death for $300,000. ? City of Dayton bonds worth $500,000 purchased by Nick five years before his death, and titled in Nick?s sole name. What amount is includible in Nick?s gross estate assuming alternate valuation is not available to Nick?s estate? Answer A. $800,000. B. $1,100,000. C. $1,200,000. D. $1,700,000. 1 points Question 4 If an election is available and is made to use alternate valuation for federal estate tax purposes, then if property X is sold within six months after the decedent?s death, property X is valued for federal estate tax purposes as of which date? Answer A. The date of the decedent?s death. B. The date that is six months after the decedent?s of death. C. The date of sale of the property. D. The date the property is distributed to the beneficiaries. 1 points Question 5 Leslie died on October 31, 2011. Prior to 2009, Leslie had never made any gifts, but in 2010 she made some transfers. Specifically, on January 10, 2010, Leslie gave her vacation beach house to her five children as tenants in common. The fair market value of the vacation beach house on the date of the transfer was $50,000. The fair market value of the vacation beach house at the date of Leslie's death was $100,000. When Leslie died on October 31, 2011, she owned a vacant lot jointly with her sister, Melissa, as joint tenants with right of survivorship. Leslie and her sister each contributed $10,000 toward the $20,000 purchase price. The basis of the property did not change subsequent to the purchase, and at Leslie's death, the fair market value of the property was $60,000. There is $90,000 of life insurance on the life of Leslie, and her estate is named as the beneficiary. (Assume all assets have the same value on the alternate valuation date as on the date of death). What is the amount of Leslie?s gross estate for federal estate tax purposes? Answer A. $120,000. B. $170,000. C. $220,000. D. $250,000. 1 points Question 6 Assume for 2011 that Don made one transfer involving his granddaughter as follows: Don opened a joint checking account with his granddaughter, with right of survivorship, for her college expenses. Don made an initial deposit of $100,000. During 20011, granddaughter wrote checks on the account to the school for tuition of $15,000 and living expenses of $20,000. What is the amount of the taxable gift for federal gift tax purposes? Answer A. 0. B. $20,000. C. $22,000. D. $35,000. 1 points Question 7 Oliver gave his wife $5,100,000 worth of publicly traded stock in August 2011, outright. Oliver's basis in the stock was $50,000. What is the amount of the taxable gift for federal gift tax purposes? (Oliver made no other gifts to anyone in 2011). Answer A. 0. B. $87,000. C. $100,000. D. $5,087,000. 1 points Question 8 For 2011, what is the amount of the maximum gift tax annual exclusion per donor from the value of a gift of a future interest made to any one donee? Answer A. 0. B. $13,000. C. $26,000. D. $5,000,000. 1 points Question 9 Facts for Questions 9 and 10. Mr. Grey died on January 1, 2011. Mr. Grey made no gifts during his life. Under his will, Mr. Grey devised all of his probate assets to his wife. Mr. Grey owned the following assets, probate and nonprobate, at the date of his death: Asset 1. Home in Mr. Grey's and Mrs. Grey's (his surviving spouse) names as tenants by the entireties that was purchased in 2005. The home was had a fair market value of $2,000,000 both at the date of Mr. Grey's death and six months after the Mr. Grey's death. Asset 2. Publicly traded stocks and bonds solely in , Mr. Grey?s name that had a fair market value of $3,000,000 on the date of Mr. Grey?s death and a fair market value of $2,000,000 six months after Mr. Grey's death. Asset 3. Undeveloped real estate in Mr. Grey's name and the name of his daughter, Sue Smith, jointly with right of survivorship that Mr. Grey purchased in 2005 for $100,000. The property had a fair market value of $2,500,000 at the date of Mr. Grey?s death and a fair market value of $1,000,000 x months after the date of Mr. Grey's death. Asset 4. A condominium in the decedent's name alone purchased in 2001 and used as a vacation home that had a fair market value of $500,000 on the date of Mr. Grey?s death. The condominium was sold by the personal representative of the decedent's estate for $250,000 four months after Mr. Grey?s death. Based on the facts for questions 9 and 10, which of the following options are available to Mr. Grey?s estate for valuation of the assets includible in the gross estate? Answer A. The estate may use date of death values or it may elect alternate valuation. B. The estate must use date of death values. C. The estate must elect alternate valuation. D. Valuation is not required as no Federal Estate Tax Return is required to be filed. 1 points Question 10 Facts for Questions 9 and 10. Mr. Grey died on January 1, 2011. Mr. Grey made no gifts during his life. Under his will, Mr. Grey devised all of his probate assets to his wife. Mr. Grey owned the following assets, probate and nonprobate, at the date of his death: Asset 1. Home in Mr. Grey's and Mrs. Grey's (his surviving spouse) names as tenants by the entireties that was purchased in 2005. The home was had a fair market value of $2,000,000 both at the date of Mr. Grey's death and six months after the Mr. Grey's death. Asset 2. Publicly traded stocks and bonds solely in , Mr. Grey?s name that had a fair market value of $3,000,000 on the date of Mr. Grey?s death and a fair market value of $2,000,000 six months after Mr. Grey's death. Asset 3. Undeveloped real estate in Mr. Grey's name and the name of his daughter, Sue Smith, jointly with right of survivorship that Mr. Grey purchased in 2005 for $100,000. The property had a fair market value of $2,500,000 at the date of Mr. Grey?s death and a fair market value of $1,000,000 x months after the date of Mr. Grey's death. Asset 4. A condominium in the decedent's name alone purchased in 2001 and used as a vacation home that had a fair market value of $500,000 on the date of Mr. Grey?s death. The condominium was sold by the personal representative of the decedent's estate for $250,000 four months after Mr. Grey?s death. Based upon the facts presented in the fact pattern for questions 9 and 10, what is the amount of Mr. Grey?s gross estate for federal estate tax purposes? Answer A. 0. B. $2,500,000. C. $3,500,000. D. $4,250,000. E. $7,000,000. 1 points Question 11 Any preparer who endorses or otherwise negotiates a refund check issued to a taxpayer for a return or claim for refund prepared by the preparer is subject, with respect to each such check, to a penalty of how much? Answer A. $25. B. $50. C. $100. D. $500. 1 points Question 12 If the fraud penalty is assessed, which one of the following may be assessed with respect to the same underpayment? Answer A. Negligence penalty. B. Failure to file penalty. C. Failure to pay penalty. D. Underpayment of estimated taxes penalty. 1 points Question 13 The rules of Circular 230 apply to which of the following paid return preparers? Answer A. Only certified public accountants and attorneys. B. Only certified public accountants, attorneys, and enrolled agents. C. Only to persons who are not certified public accountants, attorneys, or enrolled agents. D. To a retail sales person who e-files fifteen tax returns per year for her paying clients. 1 points Question 14 Which of the following constitutes a violation by a tax preparer of Circular 230? Answer A. Filing a tax return with the IRS that contains a mathematical error. B. Charging a fee for preparation of a corporation?s Form 1120 equal to one-third of the taxpayer?s refund due. C. Failing to inform the IRS of an error on a client?s tax return from a prior year. D. Operating a tax blog on the internet. 1 points Question 15 Under Circular 230, to which of the following groups of return preparers do the TPIN requirements apply? Answer A. Certified public accountants, attorneys, enrolled agents, and unenrolled return preparers. B. Certified public accountants, attorneys, and enrolled agents only. C. Certified public accountants and enrolled agents only. D. Enrolled agents and unenrolled return preparers only. 1 points Question 16 Sunnie purchased 50 percent of the shares of corporation H, a calendar year S corporation, for $7,000. She also guaranteed a corporate loan of $6,000. For 2011, H had an operating loss of $22,000. What is the amount of H?s loss that Sunnie can deduct on her individual income tax return for 2011? Answer A. $11,000. B. $10,000. C. $7,000. D. 0. 1 points Question 17 Which of the following trusts is eligible to be an S corporation shareholder? Answer A. Electing small business trust. B. Eligible foreign trust. C. Qualifi ed subchapter S trust. D. Only a and c. E. All of the above trusts are eligible to be S corporation shareholders. 1 points Question 18 Which of the following count as a single S corporation shareholder? Answer A. A husband and wife. B. A spouse and a spouse?s estate. C. Members of a family with a common ancestor (who meet the six generations test). D. All of the above. 1 points Question 19 A corporation will be treated as having one class of stock if: Answer A. all of its outstanding shares of stock confer identical rights to distribution and liquidation proceeds. B. there is no differences in voting rights. C. there is no differences in the timing of distributions. D. all of the above. 1 points Question 20 To become an S corporation, a corporation must: Answer A. have once been a C corporation. B. elect to be treated as such. C. have at least 100 shareholders. D. only c and b. E. all of the above. 1 points Question 21 An S corporation may lose its S status because: Answer A. it issues a second class of stock. B. it has accumulated E&P and excess passive investment income for three consecutive years. C. the number of shareholders exceeds 100. D. all of the above. 1 points Question 22 A shareholder?s adjusted basis in the shareholder?s stock is used to determine: Answer A. the extent to which a distribution made by the corporation to the shareholder is taxable. B. the amount of losses that shareholders may deduct in a given year. C. the shareholder?s realized gain or loss upon the sale or exchange of the stock. D. all of the above. 1 points Question 23 In the current year, Sue received a liquidating distribution of real estate from UTSRQ Partnership, a general partnership. The real estate had an adjusted basis to the partnership of $35,000 and a fair market value of $90,000 on the date of the distribution. Sue?s adjusted basis in her 20 percent interest in UTSRQ Partnership was $50,000. How much gain or loss did Sue recognize on receipt of the distribution and what is her basis in the real estate? Answer A. 0 gain or loss recognized and a $50,000 basis in the real estate. B. ($15,000) loss recognized and a $35,000 basis in the real estate. C. 0 gain or loss recognized and a $35,000 basis in the real estate. D. $40,000 gain recognized and a $90,000 basis in real estate. E. $15,000 gain recognized and a $50,000 basis in real estate. 1 points Question 24 Michael owns stock in an S corporation. The corporation sustained a net operating loss this year. Michael?s pro rata share of the loss is $5,000. Michael?s adjusted basis in his S corporation stock is $1,000 without regard to the loss. In addition, Michael has a loan outstanding to the corporation in the amount of $2,000. Without regard to any passive loss limitation or any at risk rule limitation, what amount, if any, is Michael entitled to deduct with respect to the loss under the subchapter S rules? Answer A. $1,000. B. $2,000. C. $3,000. D. $5,000. 1 points Question 25 For purposes of the rules under subchapter S, which of the following is not passive investment income? Answer A. Interest. B. Sales or exchanges of stock or securities. C. Rents. D. Interest on deferred payment sales of property held for sale to customers. 1 points Question 26 Helen purchased 50 percent of the shares of HIJ Corp., a calendar year S corporation, for $7,000. She also guaranteed a corporate loan of $6,000. For 2011, HIJ Corp. had an operating loss of $22,000. Without taking into consideration any loss limitations under the passive activity loss rules or the at risk rules, what is the amount of HIJ Corp.?s loss that Helen can deduct on her individual income tax return for 2011 under the subchapter S rules? Answer A. $0. B. $7,000. C. $11,000. D. $13,000. 1 points Question 27 Which of the following tax consequences is not determined by reference to a shareholder?s adjusted basis in the shareholder?s stock in an S corporation? Answer A. the extent to which a distribution made by the corporation to the shareholder is taxable. B. the amount of losses that the shareholder may deduct in a given year. C. the shareholder?s realized gain or loss upon the sale or exchange of the stock. D. the amount of distributions to which the shareholder is entitled in a given year. 1 points Question 28 Which tax may be imposed upon an S corporation? Answer A. Accumulated earnings tax. B. Built in gains tax. C. Personal holding company tax. D. Alternative minimum tax. 1 points Question 29 Which of the following is not an eligible S corporation shareholder? Answer A. The estate of a United States? resident alien decedent. B. A qualified subchapter S trust with only United States resident alien beneficiaries. C. A multi member limited liability company owned solely by citizens of the United States. D. An electing small business trust with only United States citizen beneficiaries. 1 points Question 30 Which of the following is not a separately stated item of an S corporation? Answer A. gross income from business operations. B. tax credits. C. investment income expense. D. charitable contributions. 1 points Question 31 On January 1 of the current taxable year, Sam and Barbara form an equal partnership. Sam makes a cash contribution of $60,000 and a contribution of property with an adjusted basis to him of $160,000 and a fair market value of $140,000 in exchange for his interest in the partnership. Barbara contributes property with an adjusted basis to her of $120,000 and a fair market value of $200,000in exchange for her partnership interest. Which of the following statements is accurate regarding the income tax consequences of this transaction? Answer A. Sam?s adjusted basis in his partnership interest is $200,000. B. The partnership?s adjusted basis in the property contributed by Sam is $140,000. C. Barbara recognized a gain of $80,000 with respect to her contribution of property. D. Barbara?s adjusted basis in her partnership interest is $120,000. 1 points Question 32 Tina and Betty formed a partnership. Tina received a 40 percent interest in the partnership in exchange for land with an adjusted basis to her of $60,000 and a fair market value of $80,000. Betty received a 60 percent interest in the partnership in exchange for $120,000 of cash. Three years after the date of contribution, the land contributed by Tina was sold by the partnership to an unrelated third party for $90,000. How much gain was required to be allocated to Tina as a result of the sale by the partnership? Answer A. $4,000. B. $12,000. C. $24,000. D. $30,000. 1 points Question 33 When inventory that was contributed to a partnership in exchange for a partnership interest is eventually sold by the partnership, how will the character of the income or loss be determined? Answer A. The character of any income or loss will be ordinary regardless of when the contributed property is sold by the partnership and regardless of the character of the asset in the hands of the partnership. B. The character of any income or loss will be ordinary if the contributed property is sold by the partnership within five years after the date of contribution regardless of the character of the asset in the hands of the partnership C. The character of any income or loss will be based on the character of the asset in the hands of the partnership regardless of when the contributed property is sold by the partnership. D. The character of any income or loss will be ordinary to the extent of the contributing partner?s built-in gain or loss in the property at the time of the contribution regardless of when the contributed property is sold, and any balance will based on the character of the asset in the hands of the partnership. 1 points Question 34 Barbara and Bill formed an equal partnership, B&B, a general partnership, on January 1, 2011. Barbara contributed $100,000 in exchange for her one-half interest. Bill contributed land worth $100,000 that had an adjusted basis to him of $30,000 in exchange for his one-half interest. Which of the following statements is accurate with respect to this transaction? Answer A. None of Barbara, Bill, or B&B recognized any gain or loss. B. Bill recognized gain of $70,000 , but Barbara and B&B did not recognize any gain or loss. C. B&B recognized gain or $70,000 , but Barbara and Bill did not recognize any gain or loss. D. Bill and B&B each recognized $70,000 of gain, but Barbara did not recognize any gain or loss. 1 points Question 35 Which of the following decreases a partner?s basis in the partner?s partnership interest? Answer A. Additional contributions the partner makes during the year. B. The partner?s allocable share of tax-exempt income. C. The partner?s allocable share of partnership items of income and gain. D. Cash distributions to the partner during the year. 1 points Question 36 Jim, one of two equal partners of the JJ Partnership, a general partnership, contributed business property with an adjusted basis to him of $15,000 and a fair market value of $10,000 to the JJ Partnership. Jim?s capital account was credited with $10,000. The property later was sold for $12,000. As a result of this sale, how much gain or loss must Jim report on his personal income tax return? Answer A. $1,000 gain. B. $1,500 loss. C. $2,000 gain. D. $3,000 loss. 1 points Question 37 On January 1, 2011, Connie, Jill, and Hillary , formed a three-person equal partnership with Connie and Jill each contributing $100,000 and Hillary contributing securities with an adjusted basis to her of $60,000 and a fair market value of $100,000. On September 30, 2011, the partnership sold the securities for $130,000. How much gain was required to be allocated to Hillary as a result of the sale by the partnership? Answer A. $30,000. B. $40,000. C. $50,000. D. $70,000. 1 points Question 38 Ronald and Roy formed an equal partnership, R&R Partnership, a general partnership, on January 1, 2011. Ronald contributed $100,000 in exchange for his one-half interest in R&R partnership. Roy contributed land worth $100,000 and with an adjusted basis to Roy of $30,000 in exchange for his one-half interest in the partnership. Roy is a real estate developer, and at the time of the contribution, the land was inventory in his hands. The land is a capital asset in the hands of R&R Partnership. If R&R Partnership sells the land in 2017 to an unrelated taxpayer for $180,000,how much gain will be recognized by R&R Partnership and what will be the character of the gain? Answer A. $80,000, all of which gain will be ordinary income B. $150,000,all of which gain will be capital gain. C. $150,000,all of which gain will be ordinary income. D. $150,000, consisting of $80,000 capital gain and $70,000 ordinary income. 1 points Question 39 At the beginning of 2011, Margaret?s adjusted basis in her 30 percent interest in MP Partnership, a general partnership, was $3,000. During 2011, Margaret did not make any additional contributions to MP Partnership, and Margaret?s share of MP Partnership liabilities did not change. During 2011, MP Partnership distributed $5,000 to Margaret, and MP Partnership had the following items of partnership income, deduction, gain and loss for 2011: Taxable income $15,000 Tax-exempt interest $6,000 Section 1231 loss ($10,000) What is Margaret?s adjusted basis in her partnership interest in MP Partnership at the end of 2011? Answer A. 0. B. $1,300. C. $9,000. D. $2,700. 1 points Question 40 Glenda received a proportionate nonliquidating distribution from the EFG Partnership. The distribution consisted of $10,000 cash and property with an adjusted basis to the partnership of $34,000 and a fair market value of $42,000. Immediately before the distribution, Glenda?s adjusted basis in her partnership interest was $60,000. How much is Glenda?s basis in the noncash property distributed to her? Answer A. $10,000. B. $34,000. C. $42,000. D. $50,000. 1 points Question 41 Lara owns a 60 percent interest and Lance owns a 40 percent interest in LL Partnership, a general partnership. On January 1, 2011, Lara?s adjusted basis in her partnership interest was $60,000 and Lance?s adjusted basis for his partnership interest was $10,000. During 2011, LL Partnership had net taxable ordinary income of $50,000 and the following separately stated items: qualified dividend income of $1,000; taxable interest income of $2,600; charitable contributions of $3,000; and Section 179 expense of $20,000. During 2011, partnership liabilities decreased by $25,000 and there were no distributions made to either partner (assume liabilities are allocated in proportion to their percentage ownership of the partnership). Which of the following correctly states the basis in each partner?s interest in LL Partnership on December 31, 2011? Answer A. Lara: $63,360 and Lance: $12,240. B. Lara: $65,520 and Lance: $12,680. C. Lara: $90,360 and Lance: $30,240. D. Lara: $92,160 and Lance: $31,440. 1 points Question 42 Ten years ago, Lisa acquired a one-third interest in Dee Associates, a general partnership. In the current taxable year, when Lisa?s entire interest in the partnership was liquidated, Dee Associates? assets consisted of cash of $20,000 and tangible property with an adjusted basis to the partnership of $46,000 and a fair market value of $40,000 on the date of distribution. Dee Associates had no liabilities. Lisa?s adjusted basis in her one-third interest in the partnership was $22,000. Lisa received cash of $20,000 in complete liquidation of her entire interest. How much loss will Lisa recognize upon receipt of the liquidating distribution? Answer A. 0. B. $2,000 short-term capital loss. C. $2,000 long-term capital loss. D. $2,000 ordinary loss. 1 points Question 43 Mark, Pete and Mickey are equal partners in the 2MP Partnership, a general partnership. On January 1, 2011, Mark?s adjusted basis in his partnership interest was $15,000, Pete?s adjusted basis in his partnership interest was $10,000, and Mickey?s adjusted basis in his partnership interest was $20,000. The partnership had taxable income of $30,000 in 2011 which was allocated equally among the partners. On December 31, 2011, the partnership made a non-liquidating distribution of $25,000 cash to Pete. How much income or gain did Pete recognize as a result of the distribution? Answer A. 0. B. $5,000. C. $15,000. D. $25,000. 1 points Question 44 Ellen is a 25 percent partner in EFGH Partners, a general partnership. Ellen?s adjusted basis in her partnership interest is $18,000. During the current taxable year, Ellen received a non-liquidating distribution of land from EFGH Partners that had an adjusted basis to the partnership of $23,000 and a fair market value of $45,000 on the date of distribution. What is Ellen?s basis in the land received in the non-liquidating distribution? Answer A. 0. B. $18,000. C. $23,000. D. $45,000. 1 points Question 45 Gary is a one-third partner in GNG Partners. a general partnership. Gary?s adjusted basis in his partnership interest is $25,000. Gary received a distribution of real estate in a non-liquidating distribution from the partnership. The real estate had an adjusted basis to the partnership of $20,000 and a fair market value of $50,000 on the date of distribution. What is Gary?s basis in the real property received in the non-liquidating distribution? Answer A. 0. B. $20,000. C. $25,000. D. $50,000.,Hi Michael, will it be possible to receive this back today?,Done, thank you. But is it possible to get this back today?,Thank you for your prompt response, is it possible to get from number 23 and up today and the rest at later time?,thank you, is it possible to get any amount of answers today?,9 hours,perfect, possible to do the second half meaning questions 25 and up?

 

Paper#6268 | Written in 18-Jul-2015

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