QUESTION: 45

In which of the following situations will the grantor be taxed on income from trust property.
1. The grantor of a trust gives one of the trust beneficiaries the right to add or delete beneficiaries.
2. An adverse party to the grantor holds the power to determine the timing of trust distributions to the beneficiaries.

2 only
1 only
Neither 1 nor 2
Both 1 and 2

Answer(s): C

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QUESTION: 46

In which of the following estates would it normally be most desirable to provide for a federal estate tax marital deduction for approximately one half of the property?

In the estate of the spouse with the bulk of the family wealth when only one spouse has substantial wealth
In the estate of the first spouse to die, regardless of the relative wealth of each spouse
In the estate of the first spouse to die when neither spouse has a substantial estate
In the estate of the spouse who does not have the bulk of the family wealth when only one spouse has substantial wealth

Answer(s): A

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QUESTION: 47

Which of the following statements concerning the federal income taxation of estates is (are) correct?
1. An estate is entitled to a personal exemption of $300 and a standard deduction.
2. An estate is entitled to a tax deduction for amounts of income distributed.

2 only
Both 1 and 2
1 only
Neither 1 nor 2

Answer(s): A

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QUESTION: 48

A married man died this year leaving a gross estate of $2,700,000. Some additional facts concerning his estate are:
1. Administration expenses and debts $300,000
2. Marital deduction 800,000
3. Applicable credit amount (2005) 555,800
4. Applicable exclusion amount (2005) 1,500,000
5. State death taxes payable 17,700

Under the Unified Rate Schedule for computing estate taxes if the amount with respect to which the tentative tax to be computed is over $1,000,000 but not over $1,250,000, the tentative tax is
$345,800, plus 41 percent of the excess of such amount over $1,000,000. If the amount is over
$1,250,000 but not over $1,500,000, the tentative tax is then $448,300, plus 43 percent of the excess of such amount over $1,250,000. If the amount is over $1,500,000 but not over $2,000,000 the tentative tax is then $555,800 plus 45% of the excess of such amount over $1,500,000. Based on these facts, the net federal tax payable is

$47,065
$42,865
0
$37,035

Answer(s): D

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