Mod 39 Wrong Answers Flashcards
If medical services were provided and paid for by the decedent’s estate, what are 2 conditions for the expenses to be deducted on the final tax return?
1 executor attaches appropriate waiver and
2 medical expenses are paid within 1 year of decedent’s death
If you gift a stock to your family member and they die and you receive the stock in one year of their death, what is your basis in the stock?
Bought stock = $1,000
Gifted stock = $2,000
Inherited stock back at $3,000
Original basis of $1,000
An estate is allowed a charitable deduction on an estate’s fiduciary income tax return (Form 1041) if…2
1 decedent’s will specifically provides for contribution
2 recipient is qualified charitable organization
Amount allowed as charitable deduction is not subject to any percentage limitations, but must be paid from amounts included in the estate’s…
Gross income for year of contribution
When the grantor of a trust retains substantial control over the trust, such as power to revoke the income and remainder interests, the trust income will be taxed to…
Taxed to grantor (trust and beneficiaries won’t be taxed)
Exempt status is specifically denied to organizations if a substantial part of their activities consists of…2
1 carrying on propaganda or
2 influencing legislation
Operating a grocery store almost fully staffed by emotionally handicapped people as part of a therapeutic program, to allow the persons to become involved in society, assume responsibility and exercise business judgment would be…
Substantially related to rehabilitation purposes of exempt
organization
Retaining the power to revoke income interest or remainder interest means that…
The gift is not completed
Where are executor’s fees deducted?
Either federal estate tax return (form 706) or
Fiduciary income tax return (form 1041)
If executor’s fees are deducted on the fiduciary return they…
Cannot be deducted on the estate tax return
Generally property included in a decedent’s gross estate will be eligible for unlimited marital deduction if…
The property passes to the decedent’s surviving spouse
When the decedent owns the life insurance policy, in which the policy’s proceeds are left to the decedent’s spouse, the insurance proceeds are…2
1 included in the gross estate and
2 and are deductible as marital deduction to arrive at taxable estate
When remainder interest will pass to a family member after the expiration of 5 years, the gift of remainder interest is a…2
1 gift of future interest and
2 is not eligible for an annual exclusion
Gift of income interest out of a trust for $30,000/year is a gift of…2
1 present interest
2 it would be partially offset by annual exclusion of $14,000
If an irrevocable trust is created in which the relative will not begin receiving income until 5 years later, the gift of income interest to the relative is…
1 A gift of future interest and
2 cannot be offset by an annual exclusion
