CTC Estate & Gift Tax Planning 3

Question 1

Which IRS form is used to report and pay federal estate tax?

Accepted Answer

Form 706

Answer

Form 1041

Answer

Form 709

Answer

Form 1040-ES

Question 2

Under IRC Section 6166, a qualifying estate may elect to:

Accepted Answer

Pay the portion of estate tax attributable to a closely held business interest in installments over a period of up to 14 years

Answer

Defer all estate tax payments for five years after death without accruing interest

Answer

Exclude closely held business interests entirely from the gross estate if they exceed 50% of total assets

Answer

Convert estate tax liability on business interests into income tax deductions spread over 10 years

Question 3

Which assets are included in a decedent's gross estate for federal estate tax purposes?

Accepted Answer

All property in which the decedent had an interest at death, plus certain pre-death transfers, life insurance, and retirement accounts as defined under IRC Sections 2033–2044

Answer

Only property that passes through the decedent's probate estate under the terms of a valid will

Answer

Only assets held solely in the decedent's name; jointly held property and trust assets are excluded

Answer

All property owned at death reduced by outstanding mortgages and secured debts

Question 4

A 'qualified disclaimer' under IRC Section 2518 requires that the disclaiming party:

Accepted Answer

Make an irrevocable, unqualified refusal to accept the interest in writing within nine months of the transfer or the disclaimant's 21st birthday

Answer

File the disclaimer with the IRS within six months of the decedent's date of death

Answer

Formally waive rights before the decedent's death as part of an ante-mortem probate proceeding

Answer

Obtain court approval within 12 months of the transfer to ensure the disclaimer is legally binding

Question 5

The special use valuation election under IRC Section 2032A permits an estate to:

Accepted Answer

Value qualifying farmland or real property used in a closely held business at its current-use value rather than its highest and best use fair market value

Answer

Exclude all agricultural land from the gross estate up to the basic exclusion amount if it passes to family members

Answer

Transfer farmland to qualifying family heirs completely free of estate tax if they continue farming for five years

Answer

Revalue business real property using an income capitalization method instead of comparable market sales

Question 6

Which of the following deductions are allowable from the gross estate to compute the federal taxable estate?

Accepted Answer

Funeral expenses, debts of the decedent, administration expenses, casualty losses during administration, charitable bequests, and the marital deduction

Answer

Income taxes owed by the estate, capital losses on estate assets, and the cost of lifetime gifts previously taxed

Answer

Administrative expenses only; personal debts of the decedent are not deductible from the gross estate

Answer

Charitable bequests and the marital deduction only; operational and administration expenses are disallowed

Question 7

What is the statutory due date for filing Form 706 and paying any federal estate tax owed?

Accepted Answer

Nine months after the decedent's date of death, with an automatic six-month filing extension available that does not extend the payment deadline

Answer

Twelve months after the decedent's date of death, with a six-month automatic extension for both filing and payment

Answer

Six months after the decedent's date of death, with no extensions permitted for either filing or payment

Answer

One year after death, with payment deferred up to two additional years upon IRS approval