Estate Planning Please provide little explanation with the answers. ............

Question

Estate Planning

Please provide little explanation with the answers. ...............................................................................................

1- Which of the following statements concerning the filing of the federal estate tax return is (are) correct?

I. An estate tax return must be filed for all persons dying after 1987.

II. There is an automatic 2-year extension for filing the federal estate tax return of a U.S.citizen who dies in a foreign country.

(A) I only.

(B) II only.

          (C) Both I and II.

          (D) Neither I nor II.

...............................................................................................

2- What are the benefits associated with portability?

(A)    Preserves step up in basis on survivor’s death.

(B)    Better accommodates large qualified plans than credit shelter trusts.

(C)    Surviving spouse can use the deceased spouse’s unused exclusion amount without having to create complex trusts or use other tax-saving techniques.

(D)    All of the above.

Explanation / Answer

Answer:1 (A) I only.

Because there is no automatic 2-year extension for filing the federal estate tax return of a U.S.citizen who dies in a foreign country.

Answer:2 (C)    Surviving spouse can use the deceased spouse’s unused exclusion amount without having to create complex trusts or use other tax-saving techniques.

Because The Tax Relief Act also offers portability of the estate tax exemption between spouses if the first spouse to die does not use all of his or her exemption. The "deceased spouse's unused exclusion amount" is available for the surviving spouse to use in addition to the surviving spouse's exclusion but only if an election is made on a timely filed (including extensions) estate tax return of the predeceased spouse, regardless of whether the predeceased spouse is otherwise required to file an estate tax return.

http://www.walterhav.com/pubs/2010_Tax_Relief_Act_Changes_Impacting_Estate_Planning.htm

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