Estate Planning Please provide little explanation with the answers. ............
ID: 2718146 • Letter: E
Question
Estate Planning
Please provide little explanation with the answers.
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1- For purposes of the marital deduction, all the following are advantages of a power of appointment trust EXCEPT:
(A) Principal distributions can be varied according to the surviving spouse’s needs.
(B) Probate of trust corpus can be avoided at the surviving spouse’s death.
(C) Management and financial guidance exist for the surviving spouse.
(D) Non-income producing property can be purchased and safely retained in the trust.
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2- All of the following statements concerning a Section 6166 installment payment of estate taxes attributable to the inclusion of a closely held business in a decedent’s gross estate are correct EXCEPT:
(A) Under certain circumstances, the estate will forfeit its right to the installment payments and the remaining unpaid tax will be accelerated for payment.
(B) The business must constitute more than 35% of the decedent’s adjusted gross estate.
(C) If the estates qualifies, both the tax payments attributable to the business and the payments of interest on the unpaid balance must be paid in equal installments for 15 years.
(D) The estate’s personal representative has the sole discretion to elect a deferral of the estate tax payments.
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3- All the following statements concerning the “kiddie-tax” rules are correct EXCEPT:
(A) The rules are promulgated to curtail the shifting of income from high-tax-bracket parents to the lower-tax-bracket children.
(B) The rules are limited to trust income received by a child from trusts established by the child’s parents or grandparents.
(C) A standard deduction applies to a portion of the child’s unearned income.
(D) The rules provide for the taxation of a child’s net unearned income at the parent’s highest marginal tax rate.
Explanation / Answer
1> For purposes of the marital deduction, all the following are advantages of a power of appointment trust except probate of trust corpus can be avoided at the surviving spouse’s death. This does not solve the purpose. It does not corelate to the advantage of a power of appointment trust.
2> All of the following statements concerning a Section 6166 installment payment of estate taxes attributable to the inclusion of a closely held business in a decedent’s gross estate are correct except the estate’s personal representative has the sole discretion to elect a deferral of the estate tax payments. It does not include in the section because there is difference in the execution of the work under the same. There is complete time bound contract to which the person has to follow without any hault.
3> All the following statements concerning the “kiddie-tax” rules are correct except a standard deduction applies to a portion of the child’s unearned income. There is investment made to which tax is not incured.
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