One of the objectives of family tax planning is to

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Microeconomics: Private and Public Choice
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Chapter 8 / Exercise 1
Microeconomics: Private and Public Choice
Gwartney/Stroup/Sobel/Macpherson
Expert Verified
1. One of the objectives of family tax planning is to minimize income taxes on transfers of property within the family unit.
2. In arriving at the valuation of assets for estate tax purposes, the location of the property must be considered.
3. At the time of his death, Rex owned an RV. For valuation purposes, the RV should be included in his gross estate at the price a dealer in RVs would pay for the property.
4. If a decedent’s household goods are sold through public auction, the price received should be the valuation used for Federal estate tax purposes.
5. Doug inherited his mother’s bedroom furniture worth $3,000. For sentimental reasons, Martha, the daughter, pays Doug $3,500 for the furniture. The furniture should be included in the mother’s gross estate at $3,500.
6. At the time of his death, Fred held some notes receivable for loans he made to his two daughters and the payment of which he forgives in his will. The amount to be included in Fred’s gross estate as to these notes is not affected by his forgiveness.
7. Commercial annuity contracts should be valued using the tables issued by the IRS.
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The document you are viewing contains questions related to this textbook.
Microeconomics: Private and Public Choice
The document you are viewing contains questions related to this textbook.
Chapter 8 / Exercise 1
Microeconomics: Private and Public Choice
Gwartney/Stroup/Sobel/Macpherson
Expert Verified
8. In valuing a life insurance policy that has not matured (i.e., the insured is still alive), it makes a difference whether the policy is paid up.
9. Edgar creates a trust, life estate to Connie (age 46), remainder to Gene (age 18). In determining the value of the life estate, use the multiple given in the IRS valuation table for a person age 18.
10. Al creates a trust, income payable to John (age 18) for 8 years, remainder to Carol (age 36). In determining the value of John’s interest, use the multiple provided in the tables for an 8-year term certain income interest.
11. A farm has a best use valuation of $2.9 million and a current use valuation of $2 million. If § 2032A is elected, the farm can be valued in the deceased owner’s gross estate at $2 million.
12. A qualifying heir can make the § 2032A special valuation election only if he is not sure that he will keep the property for the full 10 years.
13. A recapture of special use valuation will occur even if a qualified heir ceases to use the property for farming purposes but does not otherwise dispose of it.
14. The recapture of special use valuation estate tax savings will not have income tax implications.

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