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American College HS330 Exam Overview:

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American College Fundamentals of Estate Planning test Sample Questions:

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

A) The marital deduction available to a decedent in a common-law state is equal to one half the adjusted grossestate.
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 community-property state is equal to the total amount of community property.
D) The marital deduction available to a decedent in a common-law state is limited to a maximum of $1 million.

2. Which of the following statements concerning property is (are) correct?
1.Personal property is all property that is not considered to be real property.
2.A mortgage on real property is treated as real property.

A) 2 only
B) Neither 1 nor 2
C) 1 only
D) Both 1 and 2

3. A married man is the sole owner of a small business with an estate tax value of $500,000. In addition, he and his wife own an office building as joint tenants with right of survivorship which they purchased five years ago. The building has an estate tax value of $1,500,000. They are considering dissolving the joint tenancy and retitling the building in the name of the husband as sole owner. All the following statements concerning this action are correct EXCEPT:

A) At the husband's death, his heirs would get a fully stepped-up tax basis for the property.
B) If the husband dies first, the probate costs of his estate could be increased.
C) At the husband's death, it would be easier to qualify his estate for an IRC Section 303 stock redemption of his business interest.
D) If the husband dies first and leaves the office building outright to his wife, there would be no federal estate tax attributed to its inclusion in his gross estate.

4. Which of the following statements concerning federal gift, estate, and income taxes is (are) correct:
1.A taxable gift of income-producing property automatically transfers income tax liability to the donee.
2.The value of gifts made within 3 years of death cannot be brought back into the donor's gross estate.

A) 2 only
B) Neither 1 nor 2
C) 1 only
D) Both 1 and 2

5. All the following transfers are subject to the generation-skipping transfer tax (GSTT) EXCEPT:

A) A direct cash payment of $28,000 from a grandparent to a private prep school to cover the tuition costs for her grandchild.
B) A termination of a trust at the death of thenonskip life income beneficiary with the remainder distributed solely to skip persons.
C) A distribution to a grandchild from a sprinkle trust created by a grandparent to benefit both skip and non-skip beneficiaries.
D) A direct cash gift of $50,000 from a grandparent to his grandchild if such grandchild's parents are still alive.

Solutions: