Reference no: EM133122
Question:
1. Ann, who died in January 2012, was survived by her husband, Jack. Jack and Ann were married in 1996. Ann's federal gross estate was equivalent to $6,000,000 on the date of her death. When Ann died, Ann's assets added an undeveloped parcel of real estate in Jacksonville in the names of "Jack and Ann, as joint tenants with right of survivorship." The fair market value of the land on the date of Ann's death was $750,000. Jack provided all of the deliberation for the purchase of the land, paying $200,000 for it in 2000. Alternate valuation is not required to Ann's estate as all assets owned by Ann may pass, either under Ann's last can and testament or by operation of law, to Jack. Evaluate Jack's basis in the real estate after Ann's death?
a. $200,000.
b. $375,000.
c. $475,000.
d. $750,000.
2. In 2012, Ann prepared a gift of stock (basis of $813,000; fair market value of $413,000) to her mother, Lulu. As a result of the transfer, Ann paid a gift tax of $60,000. Lulu's income tax basis in the stock is:
a. $413,000 basis for profit and loss if Lulu sells the property.
b. $443,000 basis for profit and loss if Lulu sells the property.
c. $813,000 basis if Lulu sells it for profit and $413,000 basis if Lulu sells it at a loss.
d. $873,000 basis for profit and loss if Lulu sells the property.
e. None of the above.
3. At the time of his death in January 2013, John owned land with his mother, Ann, as tenants in common. Ann and John purchased the property in 2010 with each paying $150,000 of the $300,000 purchase prince. The fair market value of the whole land was $600,000 on the date of John's death and $600,000 on the date that was six months after John's death. John's mother was the sole beneficiary under John's can. John's gross estate for federal estate tax purposes was $1,000,000 on the date of his death. Determine John's mother's total basis in the real estate once she has title to the complete parcel? Suppose that the fair market value of the property is still $600,000 on the day that Ann gets title to the whole property.
a. $150,000.
b. $300,000.
c. $450,000.
d. $500,000.
4. At the time of his death in January 2013, John owned real estate in the name of John and his sister Ann, as joint tenants with right of survivorship. Ann and John purchased the property in 2010 with each paying $150,000 of the $300,000 purchase prince. The fair market value of the whole land was $600,000 on the date of John's death and $600,000 on the date that was six months after John's death. John's mother was his sole beneficiary under his will. The property owned by Ann and John has not been sold within six months after Nick's death. John's gross estate for federal estate tax purposes was $1,000,000 on the date of his death. Evaluate Ann's total basis in the real estate after John's death?
a. $150,000.
b. $300,000.
c. $450,000.
d. $500,000.
5. If an election is required and is made to use alternate valuation for federal estate tax purposes, then if a parcel of real estate owned by the decedent is distributed within six months after the decedent's death, the parcel of real estate is valued for federal estate tax purposes as of which date?
a. The date of the decedent's death.
b. The date that is six months after the decedent's of death.
c. The date of sale of the property.
d. The date the property is distributed to the beneficiaries.
5. Susan, a widow, died on 31st October, 2012. Susan had never made any taxable gifts throughout her lifetime. On her death, she owned the subsequent property: A vacation beach house that had a basis to Susan of $3,000,000 and a fair market value on the date of Susan's death of $2,000,000, a vacant lot that she owned with her sister Mel, as tenants in general. At Susan's death, her basis in her interest in the lot was $2,000,000, and the fair market value of her interest in the lot was $2,000,000. Susan owned publicly traded stock with a source of $1,500,000 and a fair market value of $1,000,000 that was held in a transfer on death account, her sister Mel being the beneficiary. (Consider all assets have the same value on the alternating valuation date as on the date of death). Evaluate the amount of Susan's gross estate for federal estate tax purposes?
a. 0
b. $4,000,000.
c. $5,000,000.
d. $6,500,000.
6. Consider for 2013 that Bob made one transfer involving his grandson as given: Bobopened a joint checking account with his grandson, with right of survivorship, for his grandson's college expenses. Bob made an initial deposit of $100,000. During 2013, grandfather wrote checks on the account to the university for grandson's tuition of $15,000 and grandson's living expenses of $20,000. Evaluate the amount of the taxable gift for federal gift tax purposes?
a. 0.
b. $6,000.
c. $20,000.
d. $35,000.
7. On January 2, 2012, Jeanne and Steve created WHEELE Corporation. Steve contributed to WHEELE Corporation assets worth $100,000 that had an aWheeleusted basis to Steve of $14,000. The contributed assets were subject to a liability of $16,000. In exchange for his contribution to WHEELE Corporation, Steve gets 80% of the shares of WHEELE Corporation. WHEELE Corporation filed a timely and proper S election effectual as of 2nd January, 2012. Steve also guaranteed a corporate loan made by The Bank in the amount of $6,000. What is Steve' aWheeleusted basis in the stock he gets from WHEELE Corporation?
a. $14,000.
b. $16,000.
c. $22,000.
d. $106,000.
8. Refer to the facts of question 7. For 2012, WHEELE Corporation had an working loss of $44,000. Without regard to any at passive or risk activity loss limitation, evaluate the amount of SJ Corporation's loss that Steve can deduct on his individual income tax return for 2012?
a. $14,000.
b. $16,000.
c. $22,000.
d. $35,200
10. Which of the subsequent trusts is suitable to be an S corporation shareholder?
a. An electing small business trust.
b. A revocable inter vivos grantor trust, through the grantor's life.
c. A qualified subchapter S trust.
d. All of the above.
11. Ed is a 50% partner in EFGH Partners, a common partnership. Ed's adjusted basis in his partnership interest is $36,000. During the existing taxable year, Ed gets a non-liquidating distribution of land from EFGH Partners that had an adjusted basis to the partnership of $46,000 and a fair market value of $90,000 on the date of distribution. Evaluate Ed's basis in the land received in the non-liquidating distribution?
a. 0.
b. $36,000.
b. $46,000.
c. $90,000.
12. On which of the subsequent grounds can an S corporation lose its S status?
a. The corporation issues a second class of common stock that is nonvoting common stock.
b. The number of unrelated shareholders is less than
c. The corporation has a resident alien shareholder. 100.
d. None of the above.