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 706 (United States Estate and Generation-Skipping Transfer Tax Return) is filed by the executor of a decedent's estate to calculate the gross estate, allowable deductions, and any estate tax owed.

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

IRC Section 6166 provides installment payment relief when a closely held business interest exceeds 35% of the adjusted gross estate, allowing up to 5 years of interest-only payments followed by up to 10 years of principal and interest installments.

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

The gross estate is broadly defined under IRC Sections 2033–2044 to include not only probate assets but also revocable trust assets, life insurance proceeds, annuities, jointly held property, and certain transfers made within three years of death.

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

IRC Section 2518 requires a qualified disclaimer to be an irrevocable written refusal delivered within nine months of the transfer (or the disclaimant turning 21), with the disclaimed property passing without direction by the disclaimant.

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

Section 2032A reduces the taxable value of qualifying real property by allowing current-use valuation (e.g., farm value) instead of highest-and-best-use fair market value, subject to a statutory dollar ceiling on the reduction.

(CTC) Chartered Tax Consultant Practice Test

(CTC) Chartered Tax Consultant Practice Test

CTC Estate & Gift Tax Planning 3