7. David Collins died during the current year. The personal representative of David's estate reviewed the following assets. Stocks in David's name only Investment property in a trust that David has the right to revoke Primary home owned jointly with his wife (wife did not contribute to the purchase) Insurance policy owned by and insuring David with the proceeds payable to his daughter Vacation home owned jointly with his son (son did not contribute to the purchase) Cash placed in an irrevocable trust by David eight years ago with David's friend as trustee What is the value of David's gross estate for estate tax purposes? a. $3,500,000 b. $4,250,000 c. $5,300,000 d. $6,400,000 $ 2,000,000 1,500,000 1,000,000 800,000 500,000 600,000

7. David Collins died during the current year. The personal representative of David's estate reviewed the following assets. Stocks in David's name only Investment property in a trust that David has the right to revoke Primary home owned jointly with his wife (wife did not contribute to the purchase) Insurance policy owned by and insuring David with the proceeds payable to his daughter Vacation home owned jointly with his son (son did not contribute to the purchase) Cash placed in an irrevocable trust by David eight years ago with David's friend as trustee What is the value of David's gross estate for estate tax purposes? a. $3,500,000 b. $4,250,000 c. $5,300,000 d. $6,400,000 $ 2,000,000 1,500,000 1,000,000 800,000 500,000 600,000

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Randy established a trust, reserving in himself the power to terminate the trust if he is not satisfied with its operation. After two years, the power to terminate the trust expires. Randy transferred commercial real estate into the trust and specified that the income be payable annually for the benefit of his adult daughter, Michelle. Randy died one year after creation of the trust instrument. One estate tax implication for Randy of this trust is that the trust property is A) included in his estate because a family member is receiving a benefit from the trust. B) not included in his estate because a transfer for the benefit of a minor is exempt from tax. C) included in Randy's estate because he still had the power to terminate the trust at his death. D) not included in his estate because the power to terminate the trust eventually expires.
In 2001, Heather created a trust with income to her partner Gina for life, remainder to her daughter, Sonia, if living, and if Sonia is not living then to Heather if Heather is living, and if Heather is not living, then to granddaughter Beth or Beth's estate. In 2011, while all parties remain alive, Heather transfers her contingent interest to Beth, relinquishing all rights and interest in the property. In 2013, Heather dies, predeceasing Gina, Sonia, and Beth. What are Heather's estate tax consequences, if any? No Inclusion Inclusion in Grantor's gross estate pursuant to 2033 Inclusion in Grantor's gross estate pursuant to 2035 Inclusion in Grantor's gross estate pursuant to 2036 Inclusion in Grantor's gross estate pursuant to 2037 Inclusion in Grantor's gross estate pursuant to 2038
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38. Which of the following are interests that must go through probate? A residence that goes to the decedent's spouse and children according to the intestate succession statute Shares of stock bequested to the decedent's brother A bond that is community property, which passes to the surviving spouse Life insurance proceeds payable to the decedent's spouse