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50.Clarice, age 90, has accumulated $1.5 million in net assets. Included in this are three blocks of stock:Stock A has a basis of $300,000 and a fair market value of $400,000; Stock B has a basis of $400,000 and a fair market value of $200,000; Stock C has a basis of $100,000 and a fair market value of 400,000. Clarice needs $200,000 now to pay off the mortgage on her daughter’s home and she wants to make a $400,000 donation to her Church either as a lifetime or testamentary transfer. Which assets should she sell to accomplish this with the least current tax cost?a.Sell Stocks A and C now.b.Sell Stock B and leave stock C to the Church upon her death.c.Sell Stock A and leave stock C to the Church upon her death.d.Sell Stock C and leave Stock B to the Church upon her death.ANSWER LO 12.5cDIFFICULTY: Hard51.Which of the following would not be income in respect of a decedent who dies on January 4?ANSWERaLO 12.6DIFFICULTY: Moderate52. A fiduciary tax return is filed by ANSWERdLO 12.6DIFFICULTY: Easy53. Distributable net incomeANSWERaLO 12.7DIFFICULTY: Easy54.Carey is trustee of the Floyd Family Trust. The trust distributes $20,000 income to George, $10,000 to Linda, and $5,000 to George and Linda’s church. The Floyd Family trust is: a. A reversionary trust.
b. An irreversible trust.
c. A simple trust.
Chapter 12: Wealth Transfer Taxes 23d. A complex trust.ANSWERdLO 12.2 & 12.7DIFFICULTY: Moderate55.William set up a trust for his parents. Each parent is to receive one-half of the income for his or her lifetime; when one parent dies, all income is to go to the surviving parent. When the other parent dies,the remainder is to go to William. This trust isDIFFICULTY: Moderate56. A fiduciary tax return must be filed forDIFFICULTY: Easy
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Taxes, Taxation in the United States, Difficulty, Lo