Estate Planning Final Exam questions
with verified answers
A great deal of discretion is vested in the executor. All the following decisions or elections can
be the responsibility of the executor, EXCEPT: - correct answer ✔✔ Determining which heirs
should receive money from the decedent's estate
All the following statements concerning disclaimers are correct, EXCEPT: - correct answer ✔✔ A
disclaimer of a bequest must be made within nine months of the decedent's death, except for
minors.
Which of the following methods of treating estate administration costs is (are) acceptable to the
IRS?
I Deduction from the federal estate tax return
II Deduction from the estate's income tax return - correct answer ✔✔ Both I and II
It would be more advantageous to deduct administrative fees from the federal income tax
assessed against the deceased's estate instead of the deceased's gross estate for estate tax
purposes when: - correct answer ✔✔ The executor wants to reduce the taxable estate.
By the terms of a will, "B" provided for his business interest, valued at $500,000, to go to his
son. All other property, through the residuary clause valued at $200,000, was to go to Mrs. "B."
The son made a valid disclaimer. Under these circumstances, which of the following statements
is correct? - correct answer ✔✔ The disclaimer has no effect on the maximum value of the
federal estate tax marital deduction.
All the following postmortem estate-planning objectives can be accomplished by use of a
disclaimer, EXCEPT: - correct answer ✔✔ Redistributing assets among a spouse and children of
the decedent
, All the following are valid reasons for the deceased's executor to value some estate assets high,
rather than low, EXCEPT: - correct answer ✔✔ To qualify for a Sec. 303 redemption
All of the following are differences between a cross-purchase agreement and an entity-purchase
agreement for a partnership, EXCEPT: - correct answer ✔✔ A cross-purchase agreement should
include a first-offer provision, while an entity agreement need not.
The decedent owned stock in a closely held corporation. His adjusted gross estate was $15
million, and his taxable estate was $14.5 million. The decedent's personal representative would
be permitted an extension of time for payment of the federal estate tax without special appeal
to the IRS if the deceased's stock interest was valued at which of the following amounts? -
correct answer ✔✔ III only
The incentive behind a Sec. 303 redemption is that: - correct answer ✔✔ The estate tax on the
redeemed stock is eliminated.
"W," a widower, age 67, gave "Z" listed securities, for which "W" paid $160,000 several years
ago, but which were valued at $250,000 on the date of the gift. "W" paid $70,800 in gift taxes
on the transfer. What is "Z's" cost basis for income tax purposes? - correct answer ✔✔ $160,000
Which of the following statements concerning the federal gift tax is correct? - correct answer
✔✔ It is imposed on the right of the donor to make a gift.
All the following types of gifts are exempt from federal gift taxation, EXCEPT: - correct answer
✔✔ Transfer of AT&T stock to a daughter
John gives Joe stock valued at $5,000, which John purchased for $1,000. Any gift tax would be
payable: - correct answer ✔✔ By John, on $5,000
with verified answers
A great deal of discretion is vested in the executor. All the following decisions or elections can
be the responsibility of the executor, EXCEPT: - correct answer ✔✔ Determining which heirs
should receive money from the decedent's estate
All the following statements concerning disclaimers are correct, EXCEPT: - correct answer ✔✔ A
disclaimer of a bequest must be made within nine months of the decedent's death, except for
minors.
Which of the following methods of treating estate administration costs is (are) acceptable to the
IRS?
I Deduction from the federal estate tax return
II Deduction from the estate's income tax return - correct answer ✔✔ Both I and II
It would be more advantageous to deduct administrative fees from the federal income tax
assessed against the deceased's estate instead of the deceased's gross estate for estate tax
purposes when: - correct answer ✔✔ The executor wants to reduce the taxable estate.
By the terms of a will, "B" provided for his business interest, valued at $500,000, to go to his
son. All other property, through the residuary clause valued at $200,000, was to go to Mrs. "B."
The son made a valid disclaimer. Under these circumstances, which of the following statements
is correct? - correct answer ✔✔ The disclaimer has no effect on the maximum value of the
federal estate tax marital deduction.
All the following postmortem estate-planning objectives can be accomplished by use of a
disclaimer, EXCEPT: - correct answer ✔✔ Redistributing assets among a spouse and children of
the decedent
, All the following are valid reasons for the deceased's executor to value some estate assets high,
rather than low, EXCEPT: - correct answer ✔✔ To qualify for a Sec. 303 redemption
All of the following are differences between a cross-purchase agreement and an entity-purchase
agreement for a partnership, EXCEPT: - correct answer ✔✔ A cross-purchase agreement should
include a first-offer provision, while an entity agreement need not.
The decedent owned stock in a closely held corporation. His adjusted gross estate was $15
million, and his taxable estate was $14.5 million. The decedent's personal representative would
be permitted an extension of time for payment of the federal estate tax without special appeal
to the IRS if the deceased's stock interest was valued at which of the following amounts? -
correct answer ✔✔ III only
The incentive behind a Sec. 303 redemption is that: - correct answer ✔✔ The estate tax on the
redeemed stock is eliminated.
"W," a widower, age 67, gave "Z" listed securities, for which "W" paid $160,000 several years
ago, but which were valued at $250,000 on the date of the gift. "W" paid $70,800 in gift taxes
on the transfer. What is "Z's" cost basis for income tax purposes? - correct answer ✔✔ $160,000
Which of the following statements concerning the federal gift tax is correct? - correct answer
✔✔ It is imposed on the right of the donor to make a gift.
All the following types of gifts are exempt from federal gift taxation, EXCEPT: - correct answer
✔✔ Transfer of AT&T stock to a daughter
John gives Joe stock valued at $5,000, which John purchased for $1,000. Any gift tax would be
payable: - correct answer ✔✔ By John, on $5,000
