8 in 2011 donnas father dies and leaves her the

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Income Tax Fundamentals 2019
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Chapter 4 / Exercise 18
Income Tax Fundamentals 2019
Whittenburg/Gill
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____ 8. In 2011, Donna’s father dies and leaves her the family farm. The farm has a current use value of $4,000,000 and a best use value of $4,500,000. If the § 2032A election is made, the farm should be included in the father’s gross estate at a value of: a. $1,000,000. b. $2,980,000 ($4,000,000 – $1,020,000). c. $3,480,000 ($4,500,000 – $1,020,000). d. $4,000,000. e. None of the above.
____ 9. Which, if any, of the items listed below are valid factors utilized in valuing the stock in a closely held corporation?
____ 10. At the time of his death, Harvey was a shareholder in Grebe Corporation. In valuing the Grebe stock included in Harvey’s gross estate, the IRS contends that the corporation possessed considerable goodwill. In disputing this contention, which of the following point(s) is/are relevant?
____ 11. At the time of Rick’s death, he owned 70% of the stock in Robin Corporation, a closely held family business. Over the past five years, Robin has averaged annual profits of $400,000 in an industry where the usual rate of return is 9%. If the book value of the corporation’s assets is $1,000,000 and goodwill exists, what might be a realistic value of the stock in Rick’s gross estate?
____ 12. With respect to a stock interest in a closely held corporation, which, if any, of the following factors work to increase the gross estate value of the interest? a. The stock is not marketable. b. A majority interest is involved. c. The profits of the business are less than the industry average. d. The blockage rule applies. e. None of the above.
____ 13. Which, if any, of the following statements properly characterize features involving buy-sell agreements?
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Income Tax Fundamentals 2019
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Chapter 4 / Exercise 18
Income Tax Fundamentals 2019
Whittenburg/Gill
Expert Verified

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