HS-330 Online Practice Questions and Answers

Which of the following statements concerning ownership of property in the form of a joint tenancy with right of survivorship is correct?

A. Qualified joint tenancies cannot be severed without mutual consent.

B. Upon the death of a joint tenant, the surviving joint tenant receives the decedent's interest by operation of law.

C. Nonqualified joint tenants may have unequal interests in the property.

D. This form of ownership is limited to real property.

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

A. An interest may extend beyond the lifetime of the grantor.

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

C. It is an interest in property established for a specific duration.

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

Which of the following statements concerning revocable trusts is correct?

A. Property of a revocable trust will be included in the grantor's probate property.

B. A transfer of income-producing property to a revocable trust will result in favorable income tax treatment for the grantor.

C. A transfer of property to a revocable trust is treated as a completed gift.

D. The transfer of property to a revocable trust is typically motivated by nontax reasons.

In addition to substantial probate assets, a married man with two minor children has a $1,000,000 ordinary life insurance policy payable to his estate. He wants to make certain that if he predeceases his wife the death proceeds will be available to provide income for his wife during her lifetime and to provide for their two children after her death. He would like the policy and/or its death proceeds to be as free of federal gift and estate taxes as possible with respect to both him and his wife. Which of the following courses of action would best accomplish these objectives?

A. Assign the policy to an irrevocable inter vivos trust with five and five powers and designate the trustee to receive the death proceeds

B. Assign the policy to his wife who will establish a revocable inter vivos trust to receive the death proceeds

C. Establish a revocable inter vivos trust and designate the trustee to receive death proceeds

D. Designate his wife as beneficiary and she will establish a testamentary trust in her will to receive the proceeds at her subsequent death

Which of the following statements concerning property is (are) correct?

1.

A mortgage on real estate is real property.

2.

A tree growing on land is real property.

A. 2 only

B. 1 only

C. Neither 1 nor 2

D. Both 1 and 2

When the owner of a closely held business dies, the payment of a portion of the federal estate tax may be deferred for a period of several years if the estate otherwise qualifies under the provisions of IRC Section 6166. Which of the following statements concerning this deferral of federal estate tax is correct?

A. The interest rate on the deferred tax is determined by the prime rate in effect on the date of death.

B. The interest on the unpaid estate tax is payable over the first 10 years, after which the tax plus interest on the balance is payable in equal installments for the last 5 years.

C. To qualify for the tax deferral, the closely held business must represent more than 50 percent of the value of the decedent's adjusted gross estate.

D. Under certain circumstances, the estate will forfeit its right to tax deferral, and all the remaining unpaid estate tax will become due and payable immediately.

Which of the following statements concerning marital transfers to a non-U.S. citizen spouse is (are) correct?

1.

A marital deduction is automatically available as long as property is transferred outright to the non-citizen spouse.

2.

A marital deduction is automatically available if the transferor-decedent spouse is a U. S. citizen.

A. 2 only

B. 1 only

C. Neither 1 nor 2

D. Both 1 and 2

Which of the following statements concerning the inclusion in a decedent-employee's gross estate of a lump-sum distribution from a qualified retirement plan to a beneficiary other than the employee's estate is (are) correct?

1.

Lump-sum distributions of payments attributable to the employer's contributions are excluded from the gross estate.

2.

Lump-sum distributions of payments attributable to the decedent-employee's contributions are excluded from the gross estate.

A. Both 1 and 2

B. Neither 1 nor 2

C. 1 only

D. 2 only

All the following items of property will be included in a decedent's gross estate for federal estate tax purposes EXCEPT

A. the value of property subject to a general power of appointment that the decedent possessed at death

B. the value of a gratuitous lifetime transfer in which the decedent retained a reversionary interest on the date of death worth more than 5 percent of the value of the property and which the donee must survive the decedent to possess

C. the value of a gratuitous lifetime transfer in which the decedent retained the right for life to receive the income from the property

D. the value of all gratuitous lifetime transfers of property made within 3 years of death

Which of the following statements concerning the estate tax marital deduction is correct?

A. The marital deduction available to a decedent in a community-property state is equal to the total amount of community property.

B. The marital deduction available to a decedent in a common-law state is equal to the net amount of qualifying property passing to the surviving spouse.

C. The marital deduction available to a decedent in a common-law state is limited to a maximum of $1 million.

D. The marital deduction available to a decedent in a common-law state is equal to one half the adjusted gross estate.