Law question data bank

| August 14, 2017

2282. Question TF #1
One of the objectives of family tax planning is to minimize income taxes on
transfers of property within the family unit.

a.
True
b. False

2283. Question TF #2
In arriving at the valuation of assets for estate tax purposes, the location of
the property must be considered.

a.
True
b. False

2284. Question TF #3
At the time of his death, Rex owned an RV. For valuation purposes, the RV
should be included in his gross estate at the price a dealer in RVs would pay
for the property.

a.
True
b. False

2285. Question TF #4
If a decedent’s household goods are sold through public auction, the price
received should be the valuation used for Federal estate tax purposes.

a.
True
b. False

2286. Question TF #5
Doug inherited his mother’s bedroom furniture worth $3,000. For sentimental
reasons, Martha, the daughter, pays Doug $3,500 for the furniture. The
furniture should be included in the mother’s gross estate at $3,500.

a.
True
b. False

2287. Question TF #6
At the time of his death, Fred held some notes receivable for loans he made to
his two daughters and the payment of which he forgives in his will. The amount
to be included in Fred’s gross estate as to these notes is affected by his
forgiveness.

a.
True
b. False

2288. Question TF #7
Commercial annuity contracts should not be valued using the tables issued by
the IRS.

a.
True
b. False

2289. Question TF #8
In valuing a life insurance policy that has not matured (i.e., the insured is
still alive), it makes no difference whether the policy is paid up.

a.
True
b. False

2290. Question TF #9
Edgar creates a trust, life estate to Connie (age 46), remainder to Gene (age
18). In determining the value of the life estate, use the multiple given in the
IRS valuation table for a person age 18.

a.
True
b. False

2291. Question TF #10
Al creates a trust, income payable to John (age 18) for 8 years, remainder to
Carol (age 36). In determining the value of John’s interest, use the multiple
provided in the tables for an 8-year term certain income interest.

a.
True
b. False

2292. Question TF #11
A farm has a best use valuation of $2.9 million and a current use valuation of
$2 million. If § 2032A is elected, the farm can be valued in the deceased
owner’s gross estate at $2 million.

a.
True
b. False

2293. Question TF #12
A qualifying heir can make the § 2032A special valuation election even if he is
not sure that he will keep the property for the full 10 years.

a.
True
b. False

2294. Question TF #13
A recapture of special use valuation will not occur if a qualified heir ceases
to use the property for farming purposes but does not otherwise dispose of it.

a.
True
b. False

2295. Question TF #14
The recapture of special use valuation estate tax savings could have income tax
implications.

a.
True
b. False

2296. Question TF #15
Any recapture of special use valuation estate tax savings is imposed on the
executor of the estate.

a.
True
b. False

2297. Question TF #16
One way to dispute the existence of large goodwill is to argue that the
decedent was a key person in the operation of the business.

a.
True
b. False

2298. Question TF #17
Application of the blockage rule has been limited to just the valuation of
stocks and bonds and not to other assets.

a.
True
b. False

2299. Question TF #18
A discount for valuation purposes is allowed when the stock involved represents
a minority interest.

a.
True
b. False

2300. Question TF #19
When stock in a public corporation is traded, a discount for lack of
marketability may be available.

a.
True
b. False

2301. Question TF #20
Buy and sell agreements can be used to help solve the estate tax valuation
problems involved in the transfer by death of an interest in a small business.

a.
True
b. False

2302. Question TF #21
If a stock redemption is to be carried out, a cross-purchase type of buy and
sell agreement must be involved.

a.
True
b. False

2303. Question TF #22
One of the advantages of an estate freeze is that the common stock is not
included in the gross estate of the donor.

a.
True
b. False

2304. Question TF #23
In an estate freeze, the common stock is taxed twice—first upon the gift, and
second when the donor dies.

a.
True
b. False

2305. Question TF #24
When carrying out an estate freeze with family limited partnerships, the donors
make gifts of the general partnership interests but retain the limited
partnership interests.

a.
True
b. False

2306. Question TF #25
A donee’s income tax basis in property received as a gift will include any gift
tax paid by the donor.

a.
True
b. False

2307. Question TF #26
As to property received as a gift, a donee’s income tax basis for gain or loss
may not be the same.

a.
True
b. False

2308. Question TF #27
Richard and Marie are joint tenants in a tract of land. Upon Richard’s prior
death, Marie’s income tax basis in the land does not change.

a.
True
b. False

2309. Question TF #28
Rick and Gail are equal tenants in common in real estate. Upon Gail’s prior
death, Rick’s basis in the real estate does not change.

a.
True
b. False

2310. Question TF #29
The election by an estate of § 2032A (special use valuation as to real estate)
or § 2032 (the alternate valuation date) will have no effect on the income tax
basis of the property received by the heirs.

a.
True
b. False

2311. Question TF #30
Brad and Heather are husband and wife and live in New Mexico. Under Brad’s
will, his share of the community property passes to the children. Upon Brad’s
prior death, there will be a change in Heather’s income tax basis in her half
of the community property.

a.
True
b. False

2312. Question TF #31
Jim makes a gift of property (basis of $800,000; fair market value of $600,000)
to his wife, Molly. Six months later Molly dies, and under her will, the
property (now worth $700,000) returns to Jim. Jim’s income tax basis in the
property now is $800,000.

a.
True
b. False

2313. Question TF #32
If a traditional IRA is subject to both estate and income taxes, a withdrawal
by the heir constitutes income in respect of a decedent (IRD).

a.
True
b. False

2314. Question TF #33
The special use valuation method of § 2032A is available for valuing transfers
by gift.

a.
True
b. False

2315. Question TF #34
Joan made taxable gifts of cash in 2009 and 2010. If Joan dies in 2011, for §
2032A purposes only the gift in 2010 is considered in meeting the special use
valuation tests.

a.
True
b. False

2316. Question TF #35
The Nelsons make gifts of appreciated securities to their dependent daughter
(age 20) and son (age 21), both of which are students. If the children sell the
securities shortly thereafter, the kiddie tax will not apply to tax the gain at
the parents’ tax rate.

a.
True
b. False

2317. Question TF #36
Passing installment notes by death will not avoid any income tax on the
deferred gain.

a.
True
b. False

2318. Question TF #37
Neither the transfer by gift or by death avoids the recognition (for income tax
purposes) of any deferred interest on U.S. savings bonds.

a.
True
b. False

2319. Question TF #38
A gift of installment notes causes any deferred gross profit on the notes to be
taxed to the donees.

a.
True
b. False

2320. Question TF #39
If depreciable property is transferred by gift, any depreciation recapture
potential carries over to the donee.

a.
True
b. False

2321. Question TF #40
If depreciable property is passed by death, any depreciation recapture
potential carries over to the heir.

a.
True
b. False

2322. Question TF #41
Under Cindy’s will, her share of their community property passes to Van, her
surviving spouse. Cindy’s property is
notsubject to probate.

a.
True
b. False

2323. Question TF #42
Harvey owns a certificate of deposit listed as: “Harvey, payable on proof of
death to April.” On Harvey’s prior death, the CD is not subject to probate.

a.
True
b. False

2324. Question TF #43
Paula owns an insurance policy on her life payable to her estate. On Paula’s
death, the insurance proceeds are included in her gross estate but not her
probate estate.

a.
True
b. False

2325. Question TF #44
Walt owns an insurance policy on his life with Doris as the designated
beneficiary. On Walt’s prior death, the proceeds of the policy are part of his
probate estate.

a.
True
b. False

2326. Question TF #45
Ten years ago, Austin purchased a residence listing ownership as tenants by the
entirety with his wife, Jean. In the current year, Austin predeceases Jean. As to
the residence, nothing is included in Austin’s probate estate.

a.
True
b. False

2327. Question TF #46
Two years ago, Ellen created a revocable trust—life estate to her children,
remainder to her grandchildren. When Ellen dies in the current year, none of
the trust is included in her probate estate.

a.
True
b. False

2328. Question TF #47
Several years ago, Tad purchased land listing ownership as “Tad, Ellen, and
Kay, equal tenants in common.” In the current year, Kay dies first. None of the
value of the land is included in Kay’s probate estate.

a.
True
b. False

2329. Question TF #48
Cost and time are usually saved by passing ownership to out-of-state real
estate by death rather than by gift.

a.
True
b. False

2330. Question TF #49
Derrick dies, and under the terms of his will, all of his property passes
outright to Dion (Derrick’s surviving wife). Under these circumstances, there
is no need for Derrick’s executor to make a QTIP election.

a.
True
b. False

2331. Question TF #50
The deferral approach to the estate tax marital deduction (as opposed to the
equalization approach) is advisable if the surviving spouse is in poor health
and has many assets.

a.
True
b. False

2332. Question TF #51
Under proper circumstances, a disclaimer by an heir may increase the charitable
deduction allowed a decedent.

a.
True
b. False

2333. Question TF #52
Because of the estate tax deduction, a testamentary bequest to charity is
preferable to a lifetime transfer.

a.
True
b. False

2334. Question TF #53
Ramon sells a parcel of land (basis of $100,000; fair market value of $300,000)
to his church. As long as the selling price does not exceed $100,000, Ramon
recognizes no gain on the sale.

a.
True
b. False

2335. Question TF #54
Leona sells land held as an investment (basis of $20,000; fair market value of
$200,000) to her church for $20,000. Leona is not allowed a charitable
deduction for income tax purposes since she recovered her cost of $20,000.

a.
True
b. False

2336. Question TF #55
Whether an organization is a qualified
charity for estate tax purposes depends on its status on the date the transfer
takes place, and not when the will is executed.

a.
True
b. False

2337. Question TF #56
Herbert leaves one-half of his estate to his wife, Ramona, and the remainder to
a qualified charity. Herbert’s estate taxes would not be reduced if Ramona disclaims her interest in favor of the
charity.

a.
True
b. False

2338. Question TF #57
A disclaimer by a surviving spouse will generate additional estate tax since it
reduces the amount of marital deduction allowed.

a.
True
b. False

2339. Question TF #58
For the IRS to grant a discretionary extension of time to pay estate taxes
(under § 6161), the executor need not show that the estate would otherwise
undergo undue hardship.

a.
True
b. False

2340. Question TF #59
In satisfying the more-than-35% test for qualification under § 6166, interests
in multiple closely held businesses are aggregated when the decedent’s gross
estate includes 20% or more of the value of each such business.

a.
True
b. False

2341. Question TF #60
In satisfying the more-than-35% test of § 6166 (i.e., extended estate tax
payment schedule relative to an interest in a closely held business), some
prior gifts the decedent may have made must be considered.

a.
True
b. False

2342. Question TF #61
A decedent owned 25% of the voting stock of Siskin Corporation. Siskin has 53
shareholders. The decedent’s estate can still qualify for the § 6166 election.

a.
True
b. False

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