QUESTION: 161

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, the probate costs of his estate could be increased.
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.

Answer(s): B

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QUESTION: 162

A wife owns a $100,000 life insurance policy on her husband's life. She has named her son the revocable beneficiary. Which of the following statements concerning the life insurance is (are) correct?
1. At the husband's death, the interpolated terminal reserve of the policy is a gift to the son.
2. The annual increase in the cash value is a gift to the son.

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

Answer(s): D

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QUESTION: 163

Which of the following statements concerning the generation-skipping transfer tax (GSTT) is correct?

The GSTT rate applicable to a transfer depends upon the amount of the gift.
The lifetime exemption shelters a maximum of $1 million of transfers to grandchildren from GSTT for the current year.
Tuition payments made by a grandparent directly to a university for a grandchild's education are exempt from GSTT.
The annual exclusion against GSTT shelters gifts by a grandparent to a trust benefitting multiple grandchildren.

Answer(s): C

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QUESTION: 164

Which of the following statements concerning pooled-income funds is (are) correct?
1. The fund contains commingled donations from many sources.
2. A decedent donation purchases units in the fund which generate income that is paid at least annually to a charity.

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

Answer(s): D

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QUESTION: 164

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