HS-330 Online Practice Questions and Answers

A taxable gift has been made in which of the following situations?

1.

A father manages his disabled son's business for a year without compensation since a replacement manager would have cost $25,000.

2.

A father verbally promises his 21-year-old daughter that he will give her his antique Mercedes when she graduates from college next year.

A. 2 only

B. Neither 1 nor 2

C. Both 1 and 2

D. 1 only

Which of the following life insurance settlement options will qualify for the federal estate tax marital deduction?

1.

Proceeds left to the surviving spouse under the interest option, with interest payable to the surviving spouse who has the unrestricted right to withdraw proceeds and with any proceeds not withdrawn payable equally to her children per stirpes

2.

Proceeds left to the surviving spouse under an installment option, with any installments remaining at her death to be commuted and paid to her estate

A. Both 1 and 2

B. 1 only

C. 2 only

D. Neither 1 nor 2

Which of the following areas of consideration present common ethical issues for the estate planner?

A. Consistency

B. Compatibility

C. Compensation

D. Contracts

The personal representative of a decedent has the duty to file which of the following income tax returns?

1.

The decedent's final income tax return

2.

The estate's income tax return

A. 2 only

B. 1 only

C. Both 1 and 2

D. Neither 1 nor 2

Which of the following statements concerning the methods of valuing a closely held business for federal estate tax purposes is (are) correct?

1.

The capitalization-of-adjusted-earnings method uses a capitalization rate that varies inversely with the degree of risk and rate of return.

2.

The adjusted-book value method involves adjusting the asset components of a business to an approximate fair market value for each component.

A. 2 only

B. 1 only

C. Both 1 and 2

D. Neither 1 nor 2

Which of the following statements concerning a grantor-retained annuity trust (GRAT) is (are) correct?

1.

The grantor is taxed on trust income during the retained term.

2.

The grantor makes an irrevocable transfer to the remainderperson(s) when the trust is created.

A. Neither 1 nor 2

B. 2 only

C. 1 only

D. Both 1 and 2

All the following items are deductions from a decedent's gross estate in determining his adjusted gross estate EXCEPT

A. state death taxes

B. estate administration expenses

C. claims against the estate

D. attorney fees

All the following are conditions that must be met if an otherwise nonqualified terminable interest is to qualify (as QTIP) for the federal estate tax marital deduction EXCEPT:

A. No person can be given the right to direct that the property go to anyone other than the surviving spouse as long as the surviving spouse is alive.

B. The deceased spouse's executor must make an irrevocable election to have the property includible in the surviving spouse's gross estate.

C. The surviving spouse must be given a lifetime right to receive all the property's income at least annually.

D. The surviving spouse must make a qualified disclaimer to all other property in the deceased spouse's estate within 9 months of death.

Which of the following types of real property ownership will be deemed to be a tenancy in common?

A. Two brothers are equal partners in a general partnership that owns a piece of real property used in the partnership business.

B. Two brothers own equal fractional interests in a piece of real property and at the death of one of the brothers the survivor will own the entire piece of property.

C. Two brothers own equal undivided interests in a piece of real property, with each brother being able to divest himself of his interest by sale, gift, or will.

D. Two brothers own equal amounts of all the common stock in a corporation, the only asset of which is real property.

A widower dies leaving a net probate estate of $300,000. At the time of his death, his descendants are as

follows:

A son, Joe, who has no children;

A deceased daughter, Mary, whose two children, Irene and Sally, survive; and

A daughter, Anne, who has one child, Harry

Assuming that the widower's will provides for the distribution of his assets in equal shares to his children,

per stirpes, which of the following correctly states the amounts each descendant will receive?

A. $100,000 to Joe, $50,000 to Irene, $50,000 to Sally, $50,000 to Anne, and $50,000 to Harry

B. $60,000 to Joe, $60,000 to Irene, $60,000 to Sally, $60,000 to Anne, and $60,000 to Harry

C. $75,000 to Joe, $75,000 to Irene, $75,000 to Sally, and $75,000 to Anne

D. $100,000 to Joe, $50,000 to Irene, $50,000 to Sally, and $100,000 to Anne