A father is considering giving his daughter a gift. For tax planning purposes, the father should give his daughter which of the following?

A. Raw land that cost him $10,000, its present fair market value, but which has a substantial potential for appreciation

B. Real estate that cost him $40,000 and is now worth $120,000, subject to a $110,000 mortgage

C. Stock that cost him $10,000 and which now has a fair market value of $20,000

D. A bond that cost him $15,000 and is now worth $10,000

A married man died this year leaving a gross estate of $2,700,000. Some additional facts concerning his estate are:

-Administration expenses and debts $300,000

-Marital deduction 800,000

-

Applicable credit amount (2005) 555,800

-

Applicable exclusion amount (2005) 1,500,000

-

State death taxes payable 17,700

A.

$47,065

B.

$42,865

C.

0

D.

$37,035

If a grantor establishes an irrevocable trust, the income of the trust will be taxed to the grantor if it is used to pay premiums for life insurance on the life of

A. the father of the grantor

B. a child of the grantor

C. the spouse of the grantor

D. a grandchild of the grantor

To determine whether a taxable gift has been made, the Treasury Regulations require that there must initially be a definite finding that the

A. donor was a close friend or a relative of the donee

B. property was transferred for less than an adequate and full consideration in money or money's worth

C. transferor's actual state of mind was such that he intended to make a gift

D. property transferred was real property or tangible personal property

All the following will be brought back into the donor's gross estate for federal estate tax purposes EXCEPT

A. a gratuitous transfer of real property to a revocable inter vivos trust

B. an outright, gratuitous transfer of real property in contemplation of death

C. the gift taxes paid last year on a gratuitous transfer of real property

D. a gratuitous transfer of real property with a reserved right to use and enjoy it for life

Generally the courts will accept as the federal estate tax value of a closely held corporate business the price established by a buy-sell agreement if all the following conditions are met EXCEPT:

A. The agreement requires a deceased shareholder's executor to sell the stock at the price specified in the agreement.

B. The agreement as to per-share value is fair, adequate, and made at arm's length.

C. The agreement requires the payment of liquidated damages to the survivors if the executor fails to carry out its terms.

D. The agreement requires a shareholder to first offer his stock to the corporation or other shareholders at the specified price if he wishes to sell it during his lifetime.

All the following factors are important in assessing liquidity needs in estate planning EXCEPT the

A. ages of the residuary estate beneficiaries

B. types of assets that comprise the estate

C. marital status of the testator

D. projected estate tax liability

All the following statements concerning the gift and estate tax chartiable deduction are correct EXCEPT:

A. An estate tax charitable deduction is allowed for the full value of property transferred to a qualified charity but only if the property is included in the donor gross estate.

B. A donor is denied a charitable deduction for property that passes to a qualified charity as the result of a qualified disclaimer if the donor original transfer was to a noncharitable donee.

C. It is possible for a charitable contribution made during the donor lifetime to generate both income and transfer tax deductions for the donor.

D. If the donor retains an interest in property contributed to a qualified charity during lifetime, the value of the property may be included in the donor gross estate.

Believing that his death was imminent, a widower gave his son some real estate two years ago, and filed a timely gift tax return. The widower died on January 1st of this year. Additional facts are:

-Widower's basis in the real estate $150,000

-

Value of real estate when gifted 400,000

-

Value of real estate on date of death 800,000

-

Amount of gift tax paid by widower 121,800

A.

The gift tax paid is brought back into the widower's gross estate at $121,800.

B.

The gift of the real estate is included in the calculation of the widower's federal estate tax as an adjusted taxable gift.

C.

The son's income tax basis in the real estate is $800,000.

D.

The widower recognized no gain for income tax purposes at the time the gift was made.

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. Both 1 and 2

B. Neither 1 nor 2

C. 1 only

D. 2 only