Cannon Trust School 1 || A+ Graded.
Your client owns a $200,000 home in joint tenancy, a $15,000 car in his own name, an
$8,000 CD in his name alone, and a $100,000-life insurance policy with a cash value of
$10,000, payable to his wife. What is the value of his probate estate?
- $23,000
- $33,000
- $223,000
- $333,000 correct answers $23,000
A simple trust earned $27,000 in dividends. It paid $4,000 in trustee fees, one-half
from income and one-half from principal. Trust accounting income is which of the
following?
- $0
- $23,000
- $25,000
- $27,000 correct answers $25,000
If the Trust Document is silent with respect to a certain cash transaction, the Trust
Administrator should first look to which of the following for guidance?
- Court of Jurisdiction
- Principal and Income Law of the State
- Grantor
- OCC correct answers Principal and Income Law of the State
When determining a long-term sustainable rate of return for a unitrust payout, which of
the following best represents the range of high confidence payout percentages?
- 1-2%
- 2-3%
- 3-5%
- 120% of the federal midterm rate correct answers 3-5%
Which of the following is an example of tangible personal property?
- Gold bar
- Common stock certificate
- Patent
- Vacant land correct answers Gold bar
Which of the following is an example of tangible personal property?
,- Family residence
- IBM stock
- Jewelry
- Rental house correct answers Jewelry
A to B for life, then to C. Following this transfer, which of the following is true?
- A has a fee simple interest.
- B has a reversionary interest.
- C has a remainder interest.
- C has a life estate. correct answers C has a remainder interest.
Under joint tenants with rights of survivorship, when one tenant dies which of the
following best describes the result?
- Her share passes through her will to her heirs.
- Her share passes by law to her heirs, not through her will.
- Her share passes to the surviving joint tenant regardless of what her will says.
- The asset must be sold and the estate gets 1/2 of the proceeds. correct answers Her
share passes to the surviving joint tenant regardless of what her will says.
A decedent owns $400,000 in his own name, a $200,000 home in joint tenancy with his
spouse and a $100,000 life insurance policy with the children as beneficiaries. Which of
the following is the amount passing through probate?
- 0.
- $400,000.
- $500,000.
- $700,000. correct answers $400,000
In cutting down a tree, which of the following occurs?
- Real property is converted to personal property.
- Personal property is converted to real property.
- Real property is converted to a fixture.
- There is no conversion, the tree remains real property. correct answers Real property
is converted to personal property.
Which of the following transfers are includable in the gross estate of the donor if made
within 3 years of death?
- Gift of $8,000 cash value life insurance policy to son.
- Gift of $9,800 cash to daughter.
- Gift of $10,000 cash to friend.
, - Gift of $5,000 stock in a closely held company to parent. correct answers Gift of
$8,000 cash value life insurance policy to son.
Which of the following can be deducted either on the decedent's final 1040 income tax
return or on the Form 706 Estate Tax return?
- Funeral expenses.
- Medical expenses relating to the decedent's last illness.
- Court costs in probating the estate.
- Executor's administration expenses. correct answers Medical expenses relating to the
decedent's last illness.
A client made lifetime taxable gifts of $800,000 ten years prior to her death. She had an
estate worth $3,000,000 at death. The value of the property gifted during her lifetime is
worth $1,600,000 at her death. On which of the following is her tentative tax figured
prior to applying the applicable exclusion amount?
- $800,000
- $3,000,000
- $3,800,000
- $4,600,000 correct answers $3,800,000
A United States citizen living in Canada, died and was survived by a spouse, who is a
citizen of Canada. The estate valued at $18 million after expenses, passed to the
surviving spouse outright. How much of the surviving spouse's interest qualifies for the
marital deduction?
- None. There is no marital deduction for assets passing to a non-citizen spouse.
- $100,000 as indexed.
- The basic exclusion amount as indexed.
- Unlimited since the decedent is a U.S. citizen. correct answers None. There is no
marital deduction for assets passing to a non-citizen spouse.
How are death benefits from a life insurance policy, in which the decedent held
incidents of ownership, regarded for tax purposes?
Not subject to federal income tax.
Not subject to federal estate tax.
Subject to both federal income and estate tax.
Not subject to either the federal income or estate tax. correct answers Not subject to
federal income tax.
Your client owns a $200,000 home in joint tenancy, a $15,000 car in his own name, an
$8,000 CD in his name alone, and a $100,000-life insurance policy with a cash value of
$10,000, payable to his wife. What is the value of his probate estate?
- $23,000
- $33,000
- $223,000
- $333,000 correct answers $23,000
A simple trust earned $27,000 in dividends. It paid $4,000 in trustee fees, one-half
from income and one-half from principal. Trust accounting income is which of the
following?
- $0
- $23,000
- $25,000
- $27,000 correct answers $25,000
If the Trust Document is silent with respect to a certain cash transaction, the Trust
Administrator should first look to which of the following for guidance?
- Court of Jurisdiction
- Principal and Income Law of the State
- Grantor
- OCC correct answers Principal and Income Law of the State
When determining a long-term sustainable rate of return for a unitrust payout, which of
the following best represents the range of high confidence payout percentages?
- 1-2%
- 2-3%
- 3-5%
- 120% of the federal midterm rate correct answers 3-5%
Which of the following is an example of tangible personal property?
- Gold bar
- Common stock certificate
- Patent
- Vacant land correct answers Gold bar
Which of the following is an example of tangible personal property?
,- Family residence
- IBM stock
- Jewelry
- Rental house correct answers Jewelry
A to B for life, then to C. Following this transfer, which of the following is true?
- A has a fee simple interest.
- B has a reversionary interest.
- C has a remainder interest.
- C has a life estate. correct answers C has a remainder interest.
Under joint tenants with rights of survivorship, when one tenant dies which of the
following best describes the result?
- Her share passes through her will to her heirs.
- Her share passes by law to her heirs, not through her will.
- Her share passes to the surviving joint tenant regardless of what her will says.
- The asset must be sold and the estate gets 1/2 of the proceeds. correct answers Her
share passes to the surviving joint tenant regardless of what her will says.
A decedent owns $400,000 in his own name, a $200,000 home in joint tenancy with his
spouse and a $100,000 life insurance policy with the children as beneficiaries. Which of
the following is the amount passing through probate?
- 0.
- $400,000.
- $500,000.
- $700,000. correct answers $400,000
In cutting down a tree, which of the following occurs?
- Real property is converted to personal property.
- Personal property is converted to real property.
- Real property is converted to a fixture.
- There is no conversion, the tree remains real property. correct answers Real property
is converted to personal property.
Which of the following transfers are includable in the gross estate of the donor if made
within 3 years of death?
- Gift of $8,000 cash value life insurance policy to son.
- Gift of $9,800 cash to daughter.
- Gift of $10,000 cash to friend.
, - Gift of $5,000 stock in a closely held company to parent. correct answers Gift of
$8,000 cash value life insurance policy to son.
Which of the following can be deducted either on the decedent's final 1040 income tax
return or on the Form 706 Estate Tax return?
- Funeral expenses.
- Medical expenses relating to the decedent's last illness.
- Court costs in probating the estate.
- Executor's administration expenses. correct answers Medical expenses relating to the
decedent's last illness.
A client made lifetime taxable gifts of $800,000 ten years prior to her death. She had an
estate worth $3,000,000 at death. The value of the property gifted during her lifetime is
worth $1,600,000 at her death. On which of the following is her tentative tax figured
prior to applying the applicable exclusion amount?
- $800,000
- $3,000,000
- $3,800,000
- $4,600,000 correct answers $3,800,000
A United States citizen living in Canada, died and was survived by a spouse, who is a
citizen of Canada. The estate valued at $18 million after expenses, passed to the
surviving spouse outright. How much of the surviving spouse's interest qualifies for the
marital deduction?
- None. There is no marital deduction for assets passing to a non-citizen spouse.
- $100,000 as indexed.
- The basic exclusion amount as indexed.
- Unlimited since the decedent is a U.S. citizen. correct answers None. There is no
marital deduction for assets passing to a non-citizen spouse.
How are death benefits from a life insurance policy, in which the decedent held
incidents of ownership, regarded for tax purposes?
Not subject to federal income tax.
Not subject to federal estate tax.
Subject to both federal income and estate tax.
Not subject to either the federal income or estate tax. correct answers Not subject to
federal income tax.
