QUESTION: 49

Which of the following statements concerning revocable trusts is correct?

Property of a revocable trust will be included in the grantor's probate property.
A transfer of income-producing property to a revocable trust will result in favorable income tax treatment for the grantor.
A transfer of property to a revocable trust is treated as a completed gift.
The transfer of property to a revocable trust is typically motivated by nontax reasons.

Answer(s): D

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:

At the husband's death, his heirs would get a fully stepped-up tax basis for the property.
At the husband's death, it would be easier to qualify his estate for an IRC Section 303 stock redemption of his business interest.
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.
If the husband dies first, the probate costs of his estate could be increased.

Answer(s): B

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QUESTION: 51

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.

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

Answer(s): A

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QUESTION: 52

Which of the following statements concerning charitable guaranteed annuity interests is (are) correct?

1. To qualify for an estate tax charitable deduction, guaranteed annuity interests must be made in trust.
2. These interests refer to the charity right to receive a determinable income amount at least annually for a specific term or life (lives) or one or more noncharitable beneficiaries.

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

Answer(s): C

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