FIN 3720 Exam 2
(6) T/F: The gross estate includes property that avoids probate, such as life insurance proceeds
payable to a named beneficiary - ANS True
(6) Which of the following incidents of ownership, held during the three year period before death,
will cause inclusion of the life insurance proceeds in the gross estate?
-A: The right to change the beneficiary
-B: The right to borrow against the policy
-C: The right to convert group coverage to an individual contract
-D: all of the above would be brought into gross estate - ANS D
(6) The alternate valuation date is exactly ____ month(s) following the date of death?
-A: 1
-B: 3
-C: 6
-D: 12 - ANS C
(6) Which of the following is NOT a deduction from the adjusted gross estate?
-A: Estate tax marital deduction
-B: Estate tax charitable deduction
-C: Gift tax deduction
-D: State death tax deduction - ANS C
(6) The executor elects to use the alternate valuation date. Which of the following is INCORRECT?
-A: The election is irrevocable
-B: This election applies to all property included in the estate (with a few minor exceptions)
-C: The executor makes this election to decrease the value of the gross estate
-D: The executor makes this election in order to obtain a higher stepped-up basis for income tax
purposes - ANS D
, (6) At the time of death, Taryn owned an annuity with payments that will continue after death to her
beneficiary. What amount of the annuity, if any, will be included in her gross estate?
-A: none
-B: the present value of any future payments
-C: the full initial value of the annuity
-D: It depends on whether the annuity is from an IRA, a tax-sheltered annuity, or qualified plan - ANS
B
(6) Which of the following regarding portability of a deceased spouses unused exemption is
INCORRECT?
-A: A surviving spouse of more than one deceased spouse is permitted to stack portability of unused
exemptions of up to three deceased spouses
-B: The executor must make the election for portability of the deceased spouses unused exemption
on a timely-filed tax return
-C: An estate that would otherwise not be required to file a Form 706 must do so to elect portability
-D: If spouse 1 dies thi - ANS A
(6) A minority interest discount may be available when all of the following conditions apply, EXEPT:
-A: The decedent held no voting control
-B: The decedent had a minor management role in a limited partnership
-C: The business is closely held
-D: The decedent could not compel liquidation of the business - ANS B
(6) Which is NOT a common method of reducing the gross estate?
-A: Life insurance placed in an irrevocable trust
-B: Transferring property to a revocable living trust
-C: Gifts made during the donor's lifetime
(6) T/F: The gross estate includes property that avoids probate, such as life insurance proceeds
payable to a named beneficiary - ANS True
(6) Which of the following incidents of ownership, held during the three year period before death,
will cause inclusion of the life insurance proceeds in the gross estate?
-A: The right to change the beneficiary
-B: The right to borrow against the policy
-C: The right to convert group coverage to an individual contract
-D: all of the above would be brought into gross estate - ANS D
(6) The alternate valuation date is exactly ____ month(s) following the date of death?
-A: 1
-B: 3
-C: 6
-D: 12 - ANS C
(6) Which of the following is NOT a deduction from the adjusted gross estate?
-A: Estate tax marital deduction
-B: Estate tax charitable deduction
-C: Gift tax deduction
-D: State death tax deduction - ANS C
(6) The executor elects to use the alternate valuation date. Which of the following is INCORRECT?
-A: The election is irrevocable
-B: This election applies to all property included in the estate (with a few minor exceptions)
-C: The executor makes this election to decrease the value of the gross estate
-D: The executor makes this election in order to obtain a higher stepped-up basis for income tax
purposes - ANS D
, (6) At the time of death, Taryn owned an annuity with payments that will continue after death to her
beneficiary. What amount of the annuity, if any, will be included in her gross estate?
-A: none
-B: the present value of any future payments
-C: the full initial value of the annuity
-D: It depends on whether the annuity is from an IRA, a tax-sheltered annuity, or qualified plan - ANS
B
(6) Which of the following regarding portability of a deceased spouses unused exemption is
INCORRECT?
-A: A surviving spouse of more than one deceased spouse is permitted to stack portability of unused
exemptions of up to three deceased spouses
-B: The executor must make the election for portability of the deceased spouses unused exemption
on a timely-filed tax return
-C: An estate that would otherwise not be required to file a Form 706 must do so to elect portability
-D: If spouse 1 dies thi - ANS A
(6) A minority interest discount may be available when all of the following conditions apply, EXEPT:
-A: The decedent held no voting control
-B: The decedent had a minor management role in a limited partnership
-C: The business is closely held
-D: The decedent could not compel liquidation of the business - ANS B
(6) Which is NOT a common method of reducing the gross estate?
-A: Life insurance placed in an irrevocable trust
-B: Transferring property to a revocable living trust
-C: Gifts made during the donor's lifetime
