27 Jun Question Estate Plan Answer the following quest
Question
Estate Plan
Answer the following questions. Assume the facts given in the fact pattern and that the 2012 estate and gift tax rates and annual exclusion apply to all transfers in the current and previous years. (Numbers are rounded for convenience.)
1. Which of the following transfer mechanisms would be appropriate for the transfer of Fresh Veggies to James and Elizabeth assuming Kathi and Darrin did not want to make an outright gift of the company to them?
1. Private Annuity.
2. SCIN.
3. Family Limited Partnership.
4. QPRT.
(a) 1 only.
(b) 3 only.
(c) 1 and 2.
(d) 1, 2, 3 and 4.
2. If Darrin died today, which of the following statements is true regarding the transfers made in his will?
(a) Kathi will receive Darrin’s interest in the Investment Portfolio.
(b) Elizabeth will receive the proceeds of the life insurance policy.
(c) James will receive the yacht in place of the house boat.
(d) Marie may potentially receive Vacation Home 1 as Lynn’s rightful heir.
3. Assuming Darrin died today, calculate his gross estate.
(a) $5,525,000.
(b) $7,525,000.
(c) $8,025,000.
(d) $8,372,760.
4. Assuming Darrin died today, calculate his probate estate.
(a) $5,525,000.
(b) $7,525,000.
(c) $8,025,000.
(d) $8,380,320.
5. Assuming Darrin died today, calculate the marital deduction available for transfers to Kathi (remember this is a net amount).
(a) $4,425,000.
(b) $4,539,500.
(c) $5,425,500.
(d) $6,375,000.
6. Assume that Darrin died today and the estate tax due was $702,591 and Keith is appointed executor. Unfortunately, Keith forgot to file an Estate Tax Return (Form 706) and pay the estate tax due until 45 days after the return’s due date. How much is the failure-to-file penalty?
(a) $7,026.
(b) $63,233.
(c) $70,259.
(d) $77,285.
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