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25.Which of the following is not an advantage of lifetime gifts?a. The annual exclusion can shield thousands of dollars from taxation.b. Property appreciation does not enter the estate tax calculation.c. A stepped-up basis is secured for appreciated gifts.d. Gift-splitting allows spouses to combine their annual exclusions 26. Morrow died on January 15, 2013 leaving the following assets:AssetsDate of DeathFair Market ValueAlternate ValuationDate ValueHome$600,000$610,000Stocks$300,000$270,000Bonds$400,000$402,000Rolls Royce$75,000$78,000What is the value of the estate if the alternative valuation date is elected and the house was sold on March 10 for $605,000 and the stocks were sold on June 30 for $265,000?27.Both gross annual gifts and the gross estate are reduced for28. The following gifts could be subject to the generation skipping transfer tax except:29.Which of the following would not be income in respect of a decedent who dies on January 4?a. Interest credited a savings account on January 2 but not withdrawn.b. A dividend declared on December 31 payable on January 15.c. Salary payable on January 10.d. $30,000 in the decedent’s 401-K plan.30.Appreciated property that was inherited in 201331.
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:
12 Taxation for Decision Makers Test Bank32.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 is:33. Distributable net incomea. limits the amount of a distribution that is taxable to the beneficiary.b. is only made up of taxable income.c. is the minimum amount that must be distributed by a complex trust.d. is the dividend and interest earned by a trust in a year less expenses.