Question 1

Match each statement with the correct choice. Some choices may be used more than once or not used at all.
-Maximize marital deduction.

Accepted Answer

The answer of Match each statement with the correct choice....

Question 2

Match each statement with the correct choice. Some choices may be used more than once or not used at all.
-Exemption equivalent

Accepted Answer

The answer of Match each statement with the correct choice....

Question 3

Match each statement with the correct choice. Some choices may be used more than once or not used at all.
-Surviving spouse disclaims inheritance in favor of bypass amount.

Accepted Answer

If the surviving spouse disclaims inheritance in favor of the bypass amount, it does not change the amount of the deceased spouse's taxable estate.

Answer: A 
 This statement is not related to the others, but step-up in basis refers to the adjustment of the basis of assets that are inherited, typically resulting in a higher basis and therefore lower capital gains tax if the asset is later sold.

Answer: K 
 Without more context or information, it is impossible to match the statement to a correct choice.

Question 4

Match each statement with the correct choice. Some choices may be used more than once or not used at all.
-A gift will cause income tax consequences to the donor.

Accepted Answer

When a donor gifts an installment note receivable, it can trigger income tax consequences for the donor because the donor may have to recognize the gain on the installment sale at the time of the gift.

Question 5

Match each statement with the correct choice. Some choices may be used more than once or not used at all.
-Decedent owned Roth IRA that has appreciated.

Accepted Answer

JRoth IRAs do not receive a step-up in basis because they are tax-exempt accounts, making choice A incorrect. Instead, distributions to beneficiaries are generally tax-free, which supports choice I indicating no income tax consequences to the beneficiary. However, the Roth IRA may contain income in respect of a decedent (IRD) if there are earnings after the decedent's death before the assets are distributed, which is why choice J is also correct.

Question 6

Match each statement with the correct choice. Some choices may be used more than once or not used at all.
-Discount for lack of marketability as to stock.

Accepted Answer

The discount for lack of marketability as to stock often considers the cost of going public (E) among other factors, as this cost can significantly impact the marketability and thus the valuation of privately held stock.

Question 7

Match each statement with the correct choice. Some choices may be used more than once or not used at all.
-Discount attributable to a large number of shares.

Accepted Answer

The discount attributable to a large number of shares is commonly referred to as the blockage discount, which reflects the difficulty of selling a large block of securities in a single transaction without significantly affecting the market price. Therefore, the blockage rule is the best choice to address this type of discount.

Question 8

Clancy and Maureen are husband and wife and have always lived in a community property state. When Clancy learns that he is terminally ill, he gives to Maureen all of his share of the community investments that have declined in value. Why?

Accepted Answer

The answer of Clancy and Maureen are husband and wife...

Question 9

Match each statement with the correct choice. Some choices may be used more than once or not used at all.
-Corporation agrees to redeem withdrawing shareholder's stock.

Accepted Answer

Entity buy-sell agreements often involve a corporation agreeing to redeem or buy back the stock of a withdrawing shareholder.

Question 10

How could the election of the alternate valuation date (§ 2032) increase a decedent's marital deduction?

Accepted Answer

The answer of How could the election of the alternate...

Question 11

Match each statement with the correct choice. Some choices may be used more than once or not used at all.
-Decedent owned traditional IRA that has appreciated.

Accepted Answer

Traditional IRAs that have appreciated and are owned by a decedent at the time of death are considered Income in Respect of a Decedent (IRD). This means the beneficiary must include distributions from the IRA in their taxable income.

Question 12

Match each statement with the correct choice. Some choices may be used more than once or not used at all.
-Marital deduction allowed.

Accepted Answer

The answer of Match each statement with the correct choice....

Question 13

Match each statement with the correct choice. Some choices may be used more than once or not used at all.
-Surviving owners agree to purchase withdrawing owner's interest.

Accepted Answer

The answer of Match each statement with the correct choice....

Question 14

Match each statement with the correct choice. Some choices may be used more than once or not used at all.
-Donee's basis for loss.

Accepted Answer

The answer of Match each statement with the correct choice....

Question 15

Match each statement with the correct choice. Some choices may be used more than once or not used at all.
-Current use valuation as to certain realty (§ 2032A).

Accepted Answer

Current use valuation as to certain realty (§ 2032A) allows for a special use value to be used for the valuation of certain real property that is used for farming or in a closely held business. This value is typically lower than fair market value and takes into account the specific use of the property. The IRS provides guidelines for determining this value.

Question 16

Match each statement with the correct choice. Some choices may be used more than once or not used at all.
-Decedent owned stock that had depreciated in value.

Accepted Answer

When the decedent owned stock that had depreciated in value, the basis of the stock is "stepped down" to fair market value at the date of death, resulting in a step-down in basis.

Answer: J 
 Income in respect of a decedent (IRD) refers to income the decedent was entitled to but hadn't yet received before death. This income is included in the decedent's gross estate and is subject to income taxes when received by the beneficiary.

Answer: E 
 If appreciated property is given as a gift, and no gift tax is due, the donee's basis is the same as the donor's basis on the date of the gift.

Answer: F 
 The amount of the deceased spouse's taxable estate does not change under the unlimited marital deduction.

Answer: D 
 If a gift of property has potential for recapture of depreciation under § 1245 or § 1250, the recipient's basis is reduced by the amount of depreciation subject to recapture upon disposition of the property.

Answer: K 
 None of the choices are correct for the scenario of a gift of installment notes receivable or where an expected surviving spouse is in good health and 10 years younger.

Question 17

Match each statement with the correct choice. Some choices may be used more than once or not used at all.
-Valuation of life estate interest created by transfer in trust.

Accepted Answer

The IRS provides tables that can be used to value a life estate interest created by transfer in trust.

Question 18

Match each statement with the correct choice. Some choices may be used more than once or not used at all.
-Valuation of a commercial annuity contract.

Accepted Answer

The answer of Match each statement with the correct choice....

Question 19

Match each statement with the correct choice. Some choices may be used more than once or not used at all.
-Valuation of a life insurance policy that is not paid up.

Accepted Answer

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Question 20

Match each statement with the correct choice. Some choices may be used more than once or not used at all.
-Donee's basis for gain.

Accepted Answer

The answer of Match each statement with the correct choice....

Quiz 19: Family Tax Planning

Match each statement with the correct choice. Some choices may be used more than once or not used at all. -Maximize marital deduction.

Match each statement with the correct choice. Some choices may be used more than once or not used at all. -Exemption equivalent

Match each statement with the correct choice. Some choices may be used more than once or not used at all. -Surviving spouse disclaims inheritance in favor of bypass amount.

Match each statement with the correct choice. Some choices may be used more than once or not used at all. -A gift will cause income tax consequences to the donor.

Match each statement with the correct choice. Some choices may be used more than once or not used at all. -Decedent owned Roth IRA that has appreciated.

Match each statement with the correct choice. Some choices may be used more than once or not used at all. -Discount for lack of marketability as to stock.

Match each statement with the correct choice. Some choices may be used more than once or not used at all. -Discount attributable to a large number of shares.

Clancy and Maureen are husband and wife and have always lived in a community property state. When Clancy learns that he is terminally ill, he gives to Maureen all of his share of the community investments that have declined in value. Why?

Match each statement with the correct choice. Some choices may be used more than once or not used at all. -Corporation agrees to redeem withdrawing shareholder's stock.

How could the election of the alternate valuation date (§ 2032) increase a decedent's marital deduction?

Match each statement with the correct choice. Some choices may be used more than once or not used at all. -Decedent owned traditional IRA that has appreciated.

Match each statement with the correct choice. Some choices may be used more than once or not used at all. -Marital deduction allowed.

Match each statement with the correct choice. Some choices may be used more than once or not used at all. -Surviving owners agree to purchase withdrawing owner's interest.

Match each statement with the correct choice. Some choices may be used more than once or not used at all. -Donee's basis for loss.

Match each statement with the correct choice. Some choices may be used more than once or not used at all. -Current use valuation as to certain realty (§ 2032A) .

Match each statement with the correct choice. Some choices may be used more than once or not used at all. -Decedent owned stock that had depreciated in value.

Match each statement with the correct choice. Some choices may be used more than once or not used at all. -Valuation of life estate interest created by transfer in trust.

Match each statement with the correct choice. Some choices may be used more than once or not used at all. -Valuation of a commercial annuity contract.

Match each statement with the correct choice. Some choices may be used more than once or not used at all. -Valuation of a life insurance policy that is not paid up.

Match each statement with the correct choice. Some choices may be used more than once or not used at all. -Donee's basis for gain.