29 Jun Question 1. Windmill Corporation, a
Question
1. Windmill Corporation, a Dutch corporation, is owned by the following unrelated persons: 50 percent by a U.S. corporation, 5 percent by a U.S. individual, and 45 percent by a Swiss corporation. During the year, Windmill earned $2,000,000 of subpart F income. Which of the following statements is true about the application of subpart F to the income earned by Windmill?
Windmill is a CFC and the U.S. corporation and U.S. individual will have a deemed dividend of $1,000,000 and $100,000, respectively.
Windmill is a CFC and only the U.S. corporation will have a deemed dividend of $1,000,000.
Windmill is a CFC and the U.S. corporation, U.S. individual, and Swiss corporation will have a deemed dividend of $1,500,000, $100,000, and $900,000, respectively.
Windmill is not a CFC and none of the shareholders will have a deemed dividend under subpart F.
2. Before subpart F applies, a foreign corporation must be a CFC for how many consecutive days?
1
30
183
365
3. The amount of the estate tax is directly related to the amount of taxable gifts.
True
False
4. An exemption equivalent is the amount of annual gifts that is automatically exempt from the gift tax.
True
False
5. The estate tax is imposed on testamentary transfers.
True
False
6. The gross estate always includes the value of half of any real property owned by a decedent and another person in joint tenancy with the right of survivorship.
True
False
7. A completed gift must be irrevocably relinquished by the donor.
True
False
8. Both spouses must consent to any gift-splitting election.
True
False
9. A serial gift strategy consists of arranging a trust to maximize the value of the unified credit.
True
False
10. A bypass provision in a will requires a decedent to have a taxable estate in order to use a unified credit to reduce total estate taxes on a married couple.
True
False
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