Question

True/False

1. The amount of life insurance potentially included in the gross estate is the death benefit (face amount of policy) less than any outstanding policy loans.

2. The minority discount can be used to reduce the estate value of a company because the lack of control in making decisions impacting the operations of the corporation can negatively impact the FMV of the stock.

3. The gross estate includes the FMV of the financial security plus accrued interest and dividends declared but not paid.

4. Attorney Fees and Accounting Fees are deductible on both the 706 Estate Tax Return and the 1041 Estate income tax return.

5. The taxable estate is similar to the equity concept of a balance sheet. It reflects the FMV of all assets less the decedents liabilities and “estate loss from operations”

6. Exemption Portability was recently introduced in an effort to correct poor estate planning that often resulted from “sweetheart wills”. Effectively, in these cases, the first-to-die spouse’s Unified credit can be transferred to the surviving spouse.

7. For estate tax valuation propose, assets are always valued at fair market value on the date of death.

8. Retained life estate is a useful too; to remove an assets from the gross estate while retaining the ability use/enjoy the transferred property.

Answer 1

Answer 1) True

gross estate is the total value of everything you own at the time of your death. You'll then subtract your liabilities from that gross total to arrive at the value of your net estate.

Answer 2) True

A minority discount is a reduction in the price of stock from its fair market value because the minority interest owner's cannot control the business operations because of lack of marketability of the stock.

Answer 3) True

The gross estate consists of the value of all property owned by a decedent or in which the decedent had an interest at the time of death and the assets are included in the gross estate at their fair market value on the date of the decedent's death.

Answer 4) True

Below is the list of items which can deducted from gross estate

• Administrative expenses
• Accountant fee
• Attorney fee
• miscellaneous expenses