American College HS330 Exam Practice Test Instant Access

Question 1

All the following statements concerning real properly ownership by married couples as joint tenants with right of survivorship are correct EXCEPT:

AThe deceased spouse's interest in the properly qualifies for the marital deduction since it passes outright to the surviving spouse.

BAll benefits of ownership remain available to the surviving spouse without interruption during the administration of the deceased spouse's estate.

CJointly held property between spouses does not pass through the probate estate of the first spouse to die.

DIn common-law states the total value of the properly receives a stepped-up tax basis in the estate of the first spouse to die.

Answer : D

Question 2

All the following statements concerning guardians for minors are correct EXCEPT:

AA guardian named in a deceased parents will is not necessarily binding on the court.

BA guardian has equitable title to the property he administers for the minor.

CA special guardian can be appointed by the court to protect a minor's rights in a legal proceeding.

DA guardian of the person of a minor may not necessarily be the guardian of the minor's property.

Answer : B

Question 3

All the following statements concerning a grantor-retained annuity trust (GRAT) or a grantorretained unitrust (GRUT) are correct EXCEPT:

AAfter the initial transfer to a GRAT, the grantor is prohibited from making additional contributions to the trust.

BFor gift tax purposes a grantor's retained interest in these trusts is valued at zero.

CPost-transfer appreciation of property transferred to these trusts is excluded from the grantor's gross estate.

DA grantor receives an annual payout from a GRUT that is based on the value that the trust grows or contracts to each year.

Answer : B

Question 4

All the following statements concerning an estate for a term of years are correct EXCEPT:

AIt is an interest in property established for a specific duration.

BThe tenant has the right to possess the property during the term of his interest.

CThe tenant may transfer the property at the end of the term of his interest.

DAn interest may extend beyond the lifetime of the grantor.

Answer : C

Question 5

To determine whether a taxable gift has been made, the IRS focuses on all the following factors EXCEPT:

AWas the transferred property real property or personal property?

BWas the value of the gift property in excess of the annual per-donee exclusion?

CDid the donor absolutely, irrevocably, and currently divest himself of dominion and control over the property?

DWas the property transferred for less than an adequate and full consideration in money or money's worth?

Answer : A

Question 6

Income earned but unpaid at the time of a decedent's death is deemed to be income in respect of a decedent (IRD). Which of the following statements concerning IRD is (are) correct?

l. The income is taxable to the person or entity receiving it.

II. The present value of the income is includible in the decedents gross estate.

Al only

BII only

CBoth l and lI

DNeither I nor II

Answer : C

Question 7

A man is planning to establish and fund an irrevocable trust for the benefit of his two sons, ages 19 and 22, and plans to give the trustee power to sprinkle trust income. From the standpoint or providing federal income, gift, and estate tax savings, which or the following would be a suitable trustee?

l. The grantor of the trust

II. The grantor's 22-year-old son

Al only

BII only

CBoth l and ll

DNeither I nor II

Answer : D

American College HS330 Fundamentals of Estate Planning test Exam Practice Test