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| Section | Weight | Objectives |
|---|---|---|
| Topic 1: Advanced Planning Strategies | 15% | - Charitable giving techniques - Life insurance in estate planning - Business succession planning & buy-sell agreements - Planning for incapacity and special needs |
| Topic 2: Federal Gift Tax System | 20% | - Gift tax calculation and strategies - Taxable gifts and filing requirements - Exclusions, exemptions, and valuation rules |
| Topic 3: Trusts & Fiduciary Arrangements | 20% | - Trust income taxation - Revocable and irrevocable trusts - Generation-skipping transfer tax (GSTT) - Specialized trust structures |
| Topic 4: Federal Estate Tax System | 25% | - Marital and charitable deductions - Credits and tax computation - State death taxes and basis adjustments - Gross estate inclusion rules |
| Topic 5: Estate Planning Process & Legal Foundations | 20% | - Wills, powers of attorney, and advance directives - Probate process and non-probate transfers - Objectives and ethical considerations - Property ownership forms and titling |
1. 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?
A) 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.
B) The interest rate on the deferred tax is determined by the prime rate in effect on the date of death.
C) 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.
D) 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.
2. Income earned but unpaid at the time of a decedent's death is deemed to be income in respect of a decedent (IRD). All the following statements concerning IRD are correct EXCEPT:
A) The income is taxable to the person or entity receiving it.
B) IRD includes sales commissions earned prior to the decedent's death and paid to the estate according to the intestacy laws.
C) The income may be included on both the estate tax return and the estate income tax return with a corresponding deduction.
D) The income must be reported on the decedent's final federal income tax return.
3. 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
4. An individual who is a resident of State W is also the sole proprietor of a business located in State
W. He owns real property located in State X that is used by the proprietorship. While on vacation in State Y, the individual meets an untimely death. Under the terms of his will, his entire estate is bequeathed to a resident of State Z.
Which state will tax the real property used by the proprietorship?
A) State X
B) State W
C) State Y
D) State Z
5. Which of the following statements concerning pooled-income funds is (are) correct?
1.A pooled income fund is similar to a mutual fund maintained by a qualified charity.
2.It is an irrevocable arrangement in which the remainder interest passes to charity.
A) 2 only
B) Both 1 and 2
C) 1 only
D) Neither 1 nor 2
Solutions:
| Question # 1 Answer: A | Question # 2 Answer: D | Question # 3 Answer: A | Question # 4 Answer: A | Question # 5 Answer: B |
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