CIM Estate Planning 4

Question 1

A U.S. citizen dies leaving his estate to his spouse, who is not a U.S. citizen. How can the estate still obtain a marital deduction?

Accepted Answer

By transferring the assets to a qualified domestic trust (QDOT)

Answer

The unlimited marital deduction is generally unavailable for non-citizen spouses unless property passes to a QDOT.

Question 2

What must happen for a surviving spouse to use the deceased spouse's unused exclusion (DSUE) amount?

Accepted Answer

The deceased spouse's executor must elect portability on a timely filed Form 706

Answer

Portability is not automatic; the executor must file an estate tax return and make the election even if no tax is due.

Question 3

A client bought stock for $20,000 that is worth $200,000 at his death. What is the heir's cost basis under IRC Section 1014?

Accepted Answer

$200,000

Answer

Inherited assets generally receive a basis equal to fair market value at the date of death, eliminating the built-in gain.

Question 4

A donor gifts stock with a basis of $50,000 and fair market value of $30,000. The donee later sells it for $40,000. What is the donee's recognized gain or loss?

Accepted Answer

No gain or loss

Answer

Under the dual-basis rule, the gain basis is $50,000 and the loss basis is $30,000; a sale between them produces no gain or loss.

Question 5

For generation-skipping transfer (GST) tax purposes, which of the following is a 'skip person'?

Accepted Answer

The transferor's grandchild whose parent (the transferor's child) is alive

Answer

A grandchild is a skip person unless the predeceased parent exception applies, which moves the grandchild up a generation.

CIM - Chartered Investment Manager Practice Test

CIM - Chartered Investment Manager Practice Test

CIM Estate Planning 4