Acct 424_quiz 6 week - 1. Question:

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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. CORREC T 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. 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: 2 of 2 2. Question: (TCO 9) Willie and Mercedes are husband and wife and have always lived in  Pennsylvania, not a community property state.  In 1980, using joint funds, they  purchased an insurance policy (maturity value of $600,000) on Mercedes’s  life.  Their son, George, was designated as the beneficiary.  In the current  year, and at a time when the policy has a replacement cost of $50,000,  Mercedes dies.  As to the $600,000 insurance proceeds paid to George, Your Answer: $300,000 is included in Mercedes’s gross estate,  and Willie makes a gift of $300,000. CORREC T $600,000 is included in Mercedes’s gross estate. Willie makes a gift of $600,000. $50,000 is included in Mercedes’s gross estate. None of the above Instructor Explanation: Since the policy is jointly owned, only one-half of the proceeds is included in  Mercedes’s estate.  Willie is treated as making a gift of the remaining half of  the proceeds.   Points Received: 2 of 2 3. Question:
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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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Acct 424_quiz 6 week - 1. Question:

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