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American College HS330 Exam Overview:

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American College Fundamentals of Estate Planning test Sample Questions:

1. Among the assets in a decedent's gross estate is stock in a closely held corporation that was left to a nephew. The interest passing to the nephew is required to bear the burden of all estate taxes and expenses. The relevant facts about this estate are:
*Adjusted gross estate $1,200,000
*Fair market value of stock in the
*closely held corporation 500,000
*Administration and funeral expenses 25,000
*State inheritance taxes 40,000
*Federal estate taxes 160,000
What amount of closely held corporate stock may be redeemed under IRC Section 303 so that the redemption will be treated as a sale or exchange rather than a dividend distribution?

A) $ 65,000
B) $225,000
C) $500,000
D) 0

2. Which of the following statements concerning the generation-skipping transfer tax (GSTT) is correct?

A) The lifetime exemption shelters a maximum of $1 million of transfers to grandchildren from GSTT for the current year.
B) The annual exclusion against GSTT shelters gifts by a grandparent to a trust benefitting multiple grandchildren.
C) The GSTT rate applicable to a transfer depends upon the amount of the gift.
D) Tuition payments made by a grandparent directly to a university for a grandchild's education are exempt from GSTT.

3. All the following trust provisions avoid causing the inclusion of an irrevocable life insurance trust in an insured's gross estate EXCEPT

A) a trustee's power to loan assets to the estate at the trustee's discretion
B) a trustee's power to pay estate expenses
C) a trustee's power to purchase assets from the estate at the trustee's discretion
D) a trust beneficiary's power to withdraw contributions to the trust

4. Which of the following statements concerning state death taxes is correct?

A) A deduction for the full amount of state death taxes paid by a decedent estate is allowed on a decedent federal estate tax return.
B) State estate and inheritance taxes are generally imposed at the same rate regardless of the relationship of the deceased to the beneficiary.
C) A state inheritance tax is imposed on the right of the deceased to leave property to heirs.
D) A state estate tax is imposed on the right of heirs to receive property from the deceased.

5. Which of the following statements concerning marital transfers to a non-U.S. citizen spouse is (are) correct?
1.A marital deduction is automatically available as long as property is transferred outright to the non-citizen spouse.
2.A marital deduction is automatically available if the transferor-decedent spouse is a U.S. citizen.

A) Neither 1 nor2
B) 2 only
C) Both 1 and 2
D) 1 only

Solutions: