CANNON TRUST SCHOOL 1 - SPRING
2023
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?
A.-$23,000-
B.-$33,000-
C.-$223,000-
D.-$333,000---ans-✔✔A.-$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?-
A.-$0-
B.-$23,000-
C.-$25,000-
D.-$27,000---ans-✔✔C.-$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?-
A.-Court-of-Jurisdiction-
B.-Principal-and-Income-Law-of-the-State-
C.-Grantor-
D.-OCC---ans-✔✔B.-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?-
A.-1-2%-
B.-2-3%-
C.-3-5%-
D.-120%-of-the-federal-midterm-rate---ans-✔✔C.-3-5%
Which-of-the-following-is-an-example-of-tangible-personal-property?-
,A.-Gold-bar-
B.-Common-stock-certificate-
C.-Patent-
D.-Vacant-land---ans-✔✔A.-Gold-bar
Which-of-the-following-is-an-example-of-tangible-personal-property?-
A.-Family-residence-
B.-IBM-stock-
C.-Jewelry-
D.-Rental-house---ans-✔✔C.-Jewelry
A-to-B-for-life,-then-to-C.-Following-this-transfer,-which-of-the-following-is-true?-
A.-A-has-a-fee-simple-interest.-
B.-B-has-a-reversionary-interest.-
C.-C-has-a-remainder-interest.-
D.-C-has-a-life-estate.---ans-✔✔C.-C-has-a-remainder-interest.
Under-joint-tenants-with-rights-of-survivorship,-when-one-tenant-dies-which-of-the-
following-best-describes-the-result?-
A.-Her-share-passes-through-her-will-to-her-heirs.-
B.-Her-share-passes-by-law-to-her-heirs,-not-through-her-will.-
C.-Her-share-passes-to-the-surviving-joint-tenant-regardless-of-what-her-will-says.-
D.-The-asset-must-be-sold-and-the-estate-gets-1/2-of-the-proceeds.---ans-✔✔C.-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?-
A.-$0.-
B.-$400,000.-
C.-$500,000.-
D.-$700,000---ans-✔✔B.-$400,000.
In-cutting-down-a-tree,-which-of-the-following-occurs?-
A.-Real-property-is-converted-to-personal-property.-
B.-Personal-property-is-converted-to-real-property.-
C.-Real-property-is-converted-to-a-fixture.-
D.-There-is-no-conversion,-the-tree-remains-real-property---ans-✔✔A.-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?-
A.-Gift-of-$8,000-cash-value-life-insurance-policy-to-son.-
B.-Gift-of-$9,800-cash-to-daughter.-
C.-Gift-of-$10,000-cash-to-friend.-
D.-Gift-of-$5,000-stock-in-a-closely-held-company-to-parent.---ans-✔✔A.-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?-
A.-Funeral-expenses.-
B.-Medical-expenses-relating-to-the-decedent's-last-illness.-
C.-Court-costs-in-probating-the-estate.-
D.-Executor's-administration-expenses---ans-✔✔B.-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?-
A.-$800,000-
B.-$3,000,000-
C.-$3,800,000-
D.-$4,600,000---ans-✔✔C.-$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?-
A.-None.-There-is-no-marital-deduction-for-assets-passing-to-a-non-citizen-spouse.-
B.-$100,000-as-indexed.-
C.-The-basic-exclusion-amount-as-indexed.-
D.-Unlimited-since-the-decedent-is-a-U.S.-citizen---ans-✔✔A.-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?-
A.-Not-subject-to-federal-income-tax.-
B.-Not-subject-to-federal-estate-tax.-
C.-Subject-to-both-federal-income-and-estate-tax.-
2023
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?
A.-$23,000-
B.-$33,000-
C.-$223,000-
D.-$333,000---ans-✔✔A.-$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?-
A.-$0-
B.-$23,000-
C.-$25,000-
D.-$27,000---ans-✔✔C.-$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?-
A.-Court-of-Jurisdiction-
B.-Principal-and-Income-Law-of-the-State-
C.-Grantor-
D.-OCC---ans-✔✔B.-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?-
A.-1-2%-
B.-2-3%-
C.-3-5%-
D.-120%-of-the-federal-midterm-rate---ans-✔✔C.-3-5%
Which-of-the-following-is-an-example-of-tangible-personal-property?-
,A.-Gold-bar-
B.-Common-stock-certificate-
C.-Patent-
D.-Vacant-land---ans-✔✔A.-Gold-bar
Which-of-the-following-is-an-example-of-tangible-personal-property?-
A.-Family-residence-
B.-IBM-stock-
C.-Jewelry-
D.-Rental-house---ans-✔✔C.-Jewelry
A-to-B-for-life,-then-to-C.-Following-this-transfer,-which-of-the-following-is-true?-
A.-A-has-a-fee-simple-interest.-
B.-B-has-a-reversionary-interest.-
C.-C-has-a-remainder-interest.-
D.-C-has-a-life-estate.---ans-✔✔C.-C-has-a-remainder-interest.
Under-joint-tenants-with-rights-of-survivorship,-when-one-tenant-dies-which-of-the-
following-best-describes-the-result?-
A.-Her-share-passes-through-her-will-to-her-heirs.-
B.-Her-share-passes-by-law-to-her-heirs,-not-through-her-will.-
C.-Her-share-passes-to-the-surviving-joint-tenant-regardless-of-what-her-will-says.-
D.-The-asset-must-be-sold-and-the-estate-gets-1/2-of-the-proceeds.---ans-✔✔C.-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?-
A.-$0.-
B.-$400,000.-
C.-$500,000.-
D.-$700,000---ans-✔✔B.-$400,000.
In-cutting-down-a-tree,-which-of-the-following-occurs?-
A.-Real-property-is-converted-to-personal-property.-
B.-Personal-property-is-converted-to-real-property.-
C.-Real-property-is-converted-to-a-fixture.-
D.-There-is-no-conversion,-the-tree-remains-real-property---ans-✔✔A.-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?-
A.-Gift-of-$8,000-cash-value-life-insurance-policy-to-son.-
B.-Gift-of-$9,800-cash-to-daughter.-
C.-Gift-of-$10,000-cash-to-friend.-
D.-Gift-of-$5,000-stock-in-a-closely-held-company-to-parent.---ans-✔✔A.-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?-
A.-Funeral-expenses.-
B.-Medical-expenses-relating-to-the-decedent's-last-illness.-
C.-Court-costs-in-probating-the-estate.-
D.-Executor's-administration-expenses---ans-✔✔B.-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?-
A.-$800,000-
B.-$3,000,000-
C.-$3,800,000-
D.-$4,600,000---ans-✔✔C.-$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?-
A.-None.-There-is-no-marital-deduction-for-assets-passing-to-a-non-citizen-spouse.-
B.-$100,000-as-indexed.-
C.-The-basic-exclusion-amount-as-indexed.-
D.-Unlimited-since-the-decedent-is-a-U.S.-citizen---ans-✔✔A.-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?-
A.-Not-subject-to-federal-income-tax.-
B.-Not-subject-to-federal-estate-tax.-
C.-Subject-to-both-federal-income-and-estate-tax.-
