Acct424_Quiz6 - 1 Question(TCO9).In1990,$100,000(Irma...

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1. Question: (TCO 9) Arnold and Irma are married and live in Maine.  In 1990, they purchase realty for $100,000 (Irma  provides $80,000 and Arnold $20,000) and list ownership as joint tenants with right of survivorship.  In the  current year, Arnold dies first when the realty is worth $500,000.  One result of these events is: Your Answer: Arnold’s gross estate includes $250,000. CORRECT ANSWER Arnold’s gross estate includes $100,000. Arnold’s gross estate includes $400,000. In 1990, Irma made a gift to Arnold of $60,000. None of the above. INCORRECT Instructor Explanation: As to spouses, it does not matter what the original contribution was.   Automatically, 50% is included in the gross estate (choice a.).  When the property was purchased in 1990,  Irma made a gift to Arnold of $30,000 (choice d.), although its effect would be neutralized by the marital  deduction.   Points Received: 0 of 2 2. Question: (TCO 9) Before his nephew (Dean) leaves for college, Will loans him $400,000.  Dean signs a note  promising to repay the loan in five years.  No interest element is provided.  Which, if any, of the following  is  not  a tax consequence of this arrangement? Your Answer: Will has made a gift to Dean of the interest element. Will has an interest expense deduction as to the interest element. CORRECT ANSWER Dean may be allowed an income tax deduction as to the interest  element. Will has interest income as to the interest element. None of the above. INCORRECT Instructor Explanation: Points Received: 0 of 2 3. Question: (TCO 9) In which, if any, of the following independent situations has Geraldine made a gift? Your Answer: Geraldine gives her 19-year old son $20,000 to be used by him for his  college expenses Geraldine buys her grandfather a new Jaguar for his birthday. CORRECT
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This note was uploaded on 04/22/2010 for the course ACCT ACCT424 taught by Professor Tracie during the Spring '10 term at DeVry Chicago O'Hare.

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Acct424_Quiz6 - 1 Question(TCO9).In1990,$100,000(Irma...

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