Mod 39 Wrong Answers Flashcards Preview

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Flashcards in Mod 39 Wrong Answers Deck (18)
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1
Q

If medical services were provided and paid for by the decedent’s estate, what are 2 conditions for the expenses to be deducted on the final tax return?

A

1 executor attaches appropriate waiver and

2 medical expenses are paid within 1 year of decedent’s death

2
Q

If you gift a stock to your family member and they die and you receive the stock in one year of their death, what is your basis in the stock?
Bought stock = $1,000
Gifted stock = $2,000
Inherited stock back at $3,000

A

Original basis of $1,000

3
Q

An estate is allowed a charitable deduction on an estate’s fiduciary income tax return (Form 1041) if…2

A

1 decedent’s will specifically provides for contribution

2 recipient is qualified charitable organization

4
Q

Amount allowed as charitable deduction is not subject to any percentage limitations, but must be paid from amounts included in the estate’s…

A

Gross income for year of contribution

5
Q

When the grantor of a trust retains substantial control over the trust, such as power to revoke the income and remainder interests, the trust income will be taxed to…

A

Taxed to grantor (trust and beneficiaries won’t be taxed)

6
Q

Exempt status is specifically denied to organizations if a substantial part of their activities consists of…2

A

1 carrying on propaganda or

2 influencing legislation

7
Q

Operating a grocery store almost fully staffed by emotionally handicapped people as part of a therapeutic program, to allow the persons to become involved in society, assume responsibility and exercise business judgment would be…

A

Substantially related to rehabilitation purposes of exempt

organization

8
Q

Retaining the power to revoke income interest or remainder interest means that…

A

The gift is not completed

9
Q

Where are executor’s fees deducted?

A

Either federal estate tax return (form 706) or

Fiduciary income tax return (form 1041)

10
Q

If executor’s fees are deducted on the fiduciary return they…

A

Cannot be deducted on the estate tax return

11
Q

Generally property included in a decedent’s gross estate will be eligible for unlimited marital deduction if…

A

The property passes to the decedent’s surviving spouse

12
Q

When the decedent owns the life insurance policy, in which the policy’s proceeds are left to the decedent’s spouse, the insurance proceeds are…2

A

1 included in the gross estate and

2 and are deductible as marital deduction to arrive at taxable estate

13
Q

When remainder interest will pass to a family member after the expiration of 5 years, the gift of remainder interest is a…2

A

1 gift of future interest and

2 is not eligible for an annual exclusion

14
Q

Gift of income interest out of a trust for $30,000/year is a gift of…2

A

1 present interest

2 it would be partially offset by annual exclusion of $14,000

15
Q

If an irrevocable trust is created in which the relative will not begin receiving income until 5 years later, the gift of income interest to the relative is…

A

1 A gift of future interest and

2 cannot be offset by an annual exclusion

16
Q

Future interest in the irrevocable trust is…

A

Fully taxable to the individual who set up the trust

17
Q

Interest income from either a revocable or irrevocable trust received in the current year is…

A

Partially taxable, (taxable after $14,000 exclusion)

18
Q

What is the due date for a gift tax return (form 709) (where the gifter is living)?

A

April 15th

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