WMU Estate Planning Final Exam
questions with complete solutions
With respect to state death taxes, it is a decedent's closest blood relatives who have the lowest
state death tax rate and the largest exemption. - ANS ✔✔True
An inheritance tax is a tax imposes on a decedent's right to transfer property to another at
death - ANS ✔✔False
A decedent's spouse's one-half interest in community property is usually exempt from state
death taxation. - ANS ✔✔False
A decedent's gross estate and adjusted taxable gifts must exceed the applicable credit amount
for the filing of the federal estate tax return to be necessary - ANS ✔✔True
Adjusted taxable gifts do not include gifts made to a spouse that qualified for the gift tax martial
deduction. - ANS ✔✔True
A redemption of stock qualifying for Sec 303 treatment avoids treatment of the redemption as a
dividend - ANS ✔✔True
One of the primary functions of basis is to measure gain or loss when a property is disposed of
in a taxable transaction. - ANS ✔✔True
Property held jointly WROS does not received a step-up in basis at the death of a joint tenant
because this kind of property in non probate property. - ANS ✔✔False
, A donee's basis in gift property is increased by the full amount of gift taxes paid as a result of
the gift. - ANS ✔✔False
In which of the following situations would property transferred at death receive a fully stepped-
up basis?
a. income that is included in the decedent's gross estate as income in respect of decedent.
b. appreciated property acquired by the decedent by gift within one year before death, the
property passes directly or indirectly back to the original donor or the original donor's spouse
c. property held in joint tenancies between spouses that is received by the surviving spouse
upon the death of the first spouse.
d. property that passes to another because the decedent exercised a general power of
appointment over the property under his or her will - ANS ✔✔d. property that passes to
another because the decedent exercised a general power of appointment over the property
under his or her will
Frank purchased property 20k in 1990 that appreciated in value to 120k 2 years ago. Which of
the following statements concerning taxation of the property is correct?
a. if frank gifted the property to his daughter 2 years ago and the portion of the gift tax paid that
was attributed to the appreciation in value was 7,000. The daughter would have a gain of 17,00
for income tax purposes when she later sold the property for 130,000.
b. If frank gifted the property to high daughter 2 years ago, the daughter would receive a new
stepped-up basis of 120,000 for income tax purposes.
c. If frank left the property to his daughter by will and he died 2 years ago, the daughter would
have a gain of 10,000 for income tax purposes when she later sold the property for 130,000.
questions with complete solutions
With respect to state death taxes, it is a decedent's closest blood relatives who have the lowest
state death tax rate and the largest exemption. - ANS ✔✔True
An inheritance tax is a tax imposes on a decedent's right to transfer property to another at
death - ANS ✔✔False
A decedent's spouse's one-half interest in community property is usually exempt from state
death taxation. - ANS ✔✔False
A decedent's gross estate and adjusted taxable gifts must exceed the applicable credit amount
for the filing of the federal estate tax return to be necessary - ANS ✔✔True
Adjusted taxable gifts do not include gifts made to a spouse that qualified for the gift tax martial
deduction. - ANS ✔✔True
A redemption of stock qualifying for Sec 303 treatment avoids treatment of the redemption as a
dividend - ANS ✔✔True
One of the primary functions of basis is to measure gain or loss when a property is disposed of
in a taxable transaction. - ANS ✔✔True
Property held jointly WROS does not received a step-up in basis at the death of a joint tenant
because this kind of property in non probate property. - ANS ✔✔False
, A donee's basis in gift property is increased by the full amount of gift taxes paid as a result of
the gift. - ANS ✔✔False
In which of the following situations would property transferred at death receive a fully stepped-
up basis?
a. income that is included in the decedent's gross estate as income in respect of decedent.
b. appreciated property acquired by the decedent by gift within one year before death, the
property passes directly or indirectly back to the original donor or the original donor's spouse
c. property held in joint tenancies between spouses that is received by the surviving spouse
upon the death of the first spouse.
d. property that passes to another because the decedent exercised a general power of
appointment over the property under his or her will - ANS ✔✔d. property that passes to
another because the decedent exercised a general power of appointment over the property
under his or her will
Frank purchased property 20k in 1990 that appreciated in value to 120k 2 years ago. Which of
the following statements concerning taxation of the property is correct?
a. if frank gifted the property to his daughter 2 years ago and the portion of the gift tax paid that
was attributed to the appreciation in value was 7,000. The daughter would have a gain of 17,00
for income tax purposes when she later sold the property for 130,000.
b. If frank gifted the property to high daughter 2 years ago, the daughter would receive a new
stepped-up basis of 120,000 for income tax purposes.
c. If frank left the property to his daughter by will and he died 2 years ago, the daughter would
have a gain of 10,000 for income tax purposes when she later sold the property for 130,000.
