American College Fundamentals of Estate Planning test Sample Questions:

1. 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

A) $37,035
B) 0
C) $42,865
D) $47,065

2. All the following will be brought back into the donor's gross estate for federal estate tax purposes EXCEPT

A) an outright, gratuitous transfer of real property in contemplation of death
B) the gift taxes paid last year on a gratuitous transfer of real property
C) a gratuitous transfer of real property with a reserved right to use and enjoy it for life
D) a gratuitous transfer of real property to a revocable intervivos trust

3. To determine whether a taxable gift has been made, the IRS focuses on all the following factors EXCEPT:

A) Did the donor absolutely, irrevocably, and currently divest himself of dominion and control over the property?
B) Was the property transferred for less than an adequate and full consideration in money or money's worth?
C) Was the transferred property real property or personal property?
D) Was the value of the gift property in excess of the annual per-donee exclusion?

4. A man died in February of this year. Last year, when he learned that he had a terminal illness, he immediately made the following gifts and filed the required gift tax return: Fair Market Value Gift of listed stock to a
*qualified charity $100,000
*Gift of listed bonds to his wife 200,000
*Gift of a boat to his son 10,000
*Gift of a sports car to his daughter 10,000
What amount must be brought back to the man's estate as an adjusted taxable gift in the calculation of his federal estate taxes?

A) $ 90,000
B) $320,000
C) 0
D) $280,000

5. All the following are characteristics of a buy-sell agreement EXCEPT

A) It provides liquidity for estate settlement needs
B) It provides a market for the business
C) It provides for the continuation of the business
D) It provides for easier probating of the business

Solutions: