QUESTION: 121

A wealthy individual might consider selling a substantially appreciated property interest in an installment sale for which of the following reasons?
1. To spread the taxable gain inherent in the property over the period of the installments
2. To provide a buyer who lacks the requisite funds for a lump-sum purchase with the ability to finance the acquisition

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

Answer(s): D

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QUESTION: 122

Requirements for property to qualify for the federal estate tax marital deduction include which of the following?
1. The property interest must be includible in the decedent's gross estate.
2. The property must pass in such manner that it will be includible in the surviving spouse's estate at death unless consumed or given away.

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

Answer(s): A

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QUESTION: 123

When the owner of a closely held business dies, the payment of a portion of the federal estate tax may be deferred for a period of several years if the estate otherwise qualifies under the provisions of IRC Section 6166. Which of the following statements concerning this deferral of federal estate tax is correct?

Under certain circumstances, the estate will forfeit its right to tax deferral, and all the remaining unpaid estate tax will become due and payable immediately.
The interest rate on the deferred tax is determined by the prime rate in effect on the date of death.
To qualify for the tax deferral, the closely held business must represent more than 50 percent of the value of the decedent's adjusted gross estate.
The interest on the unpaid estate tax is payable over the first 10 years, after which the tax plus interest on the balance is payable in equal installments for the last 5 years.

Answer(s): A

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QUESTION: 124

An executor elects to value the assets of the estate at the alternative valuation date 6 months after death. Which of the following statements concerning the estate tax value of assets included in this estate is correct?

Property distributed under the will before the alternate valuation date is valued at the date of death.
Property that has increased in value since the date of death may be valued at the date of death if the executor so elects.
An annuity included in the gross estate that diminishes with the mere passage of time is includible at the date of death value.
Property sold before the alternate valuation date is valued at the alternate valuation date.

Answer(s): C

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QUESTION: 121

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QUESTION: 124

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