American College HS330 Quiz 2 Topic 1 Questions 6-10

Question: 1

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

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

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

CThe 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.

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

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Question: 2

In which of the following situations will the grantor be taxed on income from trust property.

l. The grantor of a trust gives one of the trust beneficiaries the right to add or delete beneficiaries.

II .An adverse party to the grantor holds the power to determine the timing of trust distributions to the beneficiaries.

Al only

BII only

CBoth l and ll

DNeither I nor II

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Question: 3

The failure of an individual to have a will can result in which of the following?

1. The state will determine the disposition of the individual's probate estate.

2. The decedent's preference for a personal representative, guardian, and other fiduciary' roles may be ignored.

Al only

BII only

CBoth l and ll

DNeither I nor II

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Question: 4

Which of the following factors is (are) used to make a choice between having an entity-purchase or a cross-purchase partnership buy-sell agreement?

l. The number of partners

ll. The divergence of the partners' business knowledge and skills

Al only

BII only

CBoth l and ll

DNeither l nor ll

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Question: 5

A single man with substantial assets and income is supporting his 80-year-old partially senile mother with monthly cash gifts. He is trying to find a practical way to support his mother while at the same time saving federal gift and income taxes without giving up ultimate control of any assets. Which of the following courses of action will best accomplish these objectives?

AMake her an interest free loan with a principal amount large enough to produce sufficient income for her support when invested in corporate bonds

BMake her annual gifts of enough interest income from the tax free municipal bonds in his portfolio so that she will be able to support herself

CMake her a gift of enough corporate bonds from his portfolio so that she will be able to support herself from the interest payments

DPurchase corporate bonds that pay interest in an amount sufficient for her to support herself and assign the interest payments to her

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American College HS330 Quiz:2 Topic:1 Questions:6-10