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EA - INDIVIDUALS EXAM QUESTIONS WITH CORRECT ANSWERS
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EA - INDIVIDUALS EXAM QUESTIONS WITH CORRECT ANSWERS
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EA - INDIVIDUALS EXAM QUESTIONSWITH CORRECT ANSWERS
When imust iForm i706-GS(T) ibe ifiled iby ia itrustee ifor ia itrust ithat ihas ia itaxable
itermination? i- iCorrect iAnswers i-By iApril i15 iof ithe iyear ifollowing ithe icalendar iyear iof
itermination
In igeneral, ithe itrustee iof iany itrust ithat ihas ia itaxable itermination imust ifile iForm i706-
GS(T) ifor ithe itax iyear iin iwhich ithe itermination ioccurred.
Pursuant ito iForm i706-GS(T) iInstructions, ipage i1, ithe itrustee imust ifile iForm i706-
GS(T) iby iApril i15 iof ithe iyear ifollowing ithe icalendar iyear iof itermination. iHowever, iif
ithe idue idate ifalls ion ia iSaturday, iSunday, ior ilegal iholiday, ithe ifiling iis idue ion ithe inext
ibusiness iday.
Instructions ifor iForm i706-GS(T)
Mr. iAlexis idied iApril i30, i2023. iHis igross iestate itotaled i$11.6 imillion. iAssuming ithat ino
iextension iis igranted, ithe iexecutor imust ifile iForm i706, iUnited iStates iEstate i(and
iGeneration-Skipping iTransfer) iTax iReturn, ion ior ibefore: i- iCorrect iAnswers i-No iestate
itax ireturn iis ifiled.
For idecedents idying iin i2023, iForm i706 imust ibe ifiled iby ithe iexecutor ifor ithe iestate iof
ievery iU.S. icitizen ior iresident:
whose igross iestate, iplus iadjusted itaxable igifts iand ispecific iexemption, iis imore ithan
i$12,920,000 ior
whose iexecutor ielects ito itransfer ithe idecedent's iunused iexclusion i(DSUE) iamount ito
ithe isurviving ispouse, iregardless iof ithe isize iof ithe idecedent's igross iestate.
If ithe iexecutor imust ifile iForm i706 ito ireport iestate iand/or igeneration-skipping itransfer
itax, iit iis idue iwithin i9 imonths iafter ithe idate iof ithe idecedent's ideath iunless ian
iextension iof itime ito ifile ihas ibeen igranted. iAn iautomatic i6-month iextension iof itime ito
ifile iis irequested iby ifiling iForm i4768.
In ithis icase, iJanuary i30 iof ithe ifollowing iyear iis ithe i9-month ilimit.
Form i706, ihowever, iis inot ifiled iin ithis icase ibecause ithe ivalue iof ithe iestate iis ibelow
i$12,920,000, iwhich iis ithe ithreshold iamount ifor irequiring ithe ifiling iof ian iestate iform.
When iLisa's ihusband idied iin i2020, ihe iset iup ia iqualified iterminable iinterest iproperty
i(QTIP) itrust, inaming iLisa ias ithe ibeneficiary ifor iher ilife. iWhat iis ithe ivalue iof iLisa's
igross iestate iif ishe ishould idie, igiven ithe ifollowing iinformation?
FMV ion iDate iof iDeath
,Lisa's irevocable igrantor itrust i$3,750,000
QTIP itrust i1,000,000 i- iCorrect iAnswers i-$4,750,000
The igross iestate iincludes iall iproperty iin iwhich ithe idecedent ihad ian iinterest i(including
ireal iproperty ioutside ithe iUnited iStates). iIt ialso iincludes:
certain itransfers imade iduring ithe idecedent's ilife iwithout ian iadequate iand ifull
iconsideration iin imoney ior imoney's iworth;
annuities;
the iincludible iportion iof ijoint iestates iwith iright iof isurvivorship;
the iincludible iportion iof itenancies iby ithe ientirety;
certain ilife iinsurance iproceeds i(even ithough ipayable ito ibeneficiaries iother ithan ithe
iestate);
digital iassets;
property iover iwhich ithe idecedent ipossessed ia igeneral ipower iof iappointment;
dower ior icurtesy i(or istatutory iestate) iof ithe isurviving ispouse; iand
community iproperty ito ithe iextent iof ithe idecedent's iinterest ias idefined iby iapplicable
ilaw.
Additionally, iany i"QTIP" iproperty ireceived ifrom ia ipre-deceased ispouse imust ibe
iincluded iin ithe igross iestate.
Which iof ithe ifollowing iis inot ia icredit iagainst igross iestate itax iin idetermining inet iestate
itax?
Foreign ideath itaxes
Qualified icharitable icontributions
Unified icredit i(applicable icredit iamount)
None iof ithe ianswer ichoices iare icorrect. i- iCorrect iAnswers i-Qualified icharitable
icontributions
Form i706, iPart i2, iline i3a, iprovides ithat ian iestate iwill iarrive iat ithe itentative itaxable
iestate iby isubtracting itotal iallowable ideductions i(not icredits) ifrom iPart i5 i(Form i706,
iline i2) iagainst itheir igross iestate. iAs iapplicable iin ithis iquestion, ithe ifollowing iexpense
i(Form i706, iPart i5) iis ipermitted ias ia ideduction:
Charitable ibequest i(Schedule iO, iForm i706)
Additionally, iestates iare iallowed ito itake icertain icredits i(Part i2, ilines i9a ito i9e iand iline
i15 iof iForm i706) iagainst ithe igross iestate iwhich iinclude ibut iare inot ilimited ito iforeign
ideath itaxes, ithe icredit ifor itax ion iprior itransfers i(Form i706 iInstructions, ipage i10), iand
ithe iunified icredit i(applicable icredit iamount) ion iline i11.
As isuch, ithe icharitable icontribution iis ia ideduction iand inot ia icredit.
What itype iof iprovision iis iavailable ifor irequesting ian iextension iof itime ito ipay ithe itax
iliability iassociated iwith iForm i706-GS(D), iGeneration-Skipping iTransfer iTax iReturn ifor
iDistributions?
An iautomatic i2-month iextension iis iavailable.
An iautomatic i4-month iextension iis iavailable.
An iautomatic i6-month iextension iis iavailable.
,No iextension iis iavailable. i- iCorrect iAnswers i-An iautomatic i6-month iextension iis
iavailable.
John iis ia isingle itaxpayer iwho idied iduring ithe icurrent itax iyear. iBased ion ithe ifollowing
iinformation, idetermine ithe ivalue iof iJohn's igross iestate.
FMV ion iDate iof iDeathLife iinsurance ion iJohn's ilife(payable ito iJohn's iestate)
i$7,250,000John's irevocable igrantor itrust i1,900,000Stock igiven ito iJohn's ison iin i2023
i(no igift itax iwas ipaid) i50,000 i- iCorrect iAnswers i-$9,150,000
The igross iestate iincludes iall iproperty iin iwhich ithe idecedent ihad ian iinterest i(including
ireal iproperty ioutside ithe iUnited iStates). iIt ialso iincludes:
certain itransfers imade iduring ithe idecedent's ilife iwithout ian iadequate iand ifull
iconsideration iin imoney ior imoney's iworth;
annuities;
the iincludible iportion iof ijoint iestates iwith iright iof isurvivorship;
the iincludible iportion iof itenancies iby ithe ientirety;
certain ilife iinsurance iproceeds i(even ithough ipayable ito ibeneficiaries iother ithan ithe
iestate);
digital iassets;
property iover iwhich ithe idecedent ipossessed ia igeneral ipower iof iappointment;
dower ior icurtesy i(or istatutory iestate) iof ithe isurviving ispouse; iand
community iproperty ito ithe iextent iof ithe idecedent's iinterest ias idefined iby iapplicable
ilaw.
How iis ia icarryover iNOL ithat iis ipassed ithrough ito ia ibeneficiary ideducted ion ithe
ibeneficiary's ireturn?
As ia imiscellaneous iitemized ideduction isubject ito ithe i2% ifloor
As ian iadjustment ito iadjusted igross iincome
As ian iadjustment ito icapital igains iincome
As ia imiscellaneous iitemized ideduction inot isubject ito ithe i2% ifloor i- iCorrect iAnswers i-
As ian iadjustment ito iadjusted igross iincome
Any iunused inet ioperating iloss icarryover ior icapital iloss icarryover iexisting iupon ithe
itermination iof ian iestate iis ipassed ithrough ito ithe ibeneficiaries iof ithe iestate. iThe
icarryovers iwill ibe iclaimed ion ithe ibeneficiary's itax ireturn. iThis itreatment iis iallowable
ionly iif ithe icarryover iwould ihave ibeen iallowed ito ithe iestate iin ia ilater itax iyear iif ithe
iestate ihad inot ibeen iterminated.
Both itypes iof icarryovers igenerally ikeep itheir isame icharacter ifor ithe ibeneficiary ias
ithey ihad ifor ithe iestate. iThe inet ioperating iloss icarryover iand ithe icapital iloss
icarryover iare iused iin ifiguring ithe ibeneficiary's iadjusted igross iincome iand itaxable
iincome. iHence, iit iis ian iadjustment ito iAGI.
If ithe ibeneficiary iof ia icapital iloss icarryover iis ia icorporation, ithe icorporation iwill itreat
ithe icarryover ias ia ishort-term icapital iloss iregardless iof iits istatus iin ithe iestate.
Which iof ithe ifollowing iitems igenerally iis iincluded iin ia iperson's iestate?
, 1. iThe itransfer iof ititle ito iproperty ito ianother iindividual iwhereby ithe idecedent iretains
ithe iright ito ithe iuse iof ithe iproperty iduring ihis ior iher ilifetime
2. iThe ireceipt iof iannuity iincome iby ithe idecedent
3. iThe iinterest iin icommunity iproperty iownership iby ithe idecedent i- iCorrect iAnswers i-
1, i2, iand i3
The igross iestate iincludes iall iproperty iin iwhich ithe idecedent ihad ian iinterest i(including
ireal iproperty ioutside ithe iUnited iStates). iIt ialso iincludes:
certain itransfers imade iduring ithe idecedent's ilife iwithout ian iadequate iand ifull
iconsideration iin imoney ior imoney's iworth;
annuities;
the iincludible iportion iof ijoint iestates iwith iright iof isurvivorship;
the iincludible iportion iof itenancies iby ithe ientirety;
certain ilife iinsurance iproceeds i(even ithough ipayable ito ibeneficiaries iother ithan ithe
iestate);
digital iassets;
property iover iwhich ithe idecedent ipossessed ia igeneral ipower iof iappointment;
dower ior icurtesy i(or istatutory iestate) iof ithe isurviving ispouse; iand
community iproperty ito ithe iextent iof ithe idecedent's iinterest ias idefined iby iapplicable
ilaw.
The iterms iof iJohn's iwill irequire iannual ipayments iof i$30,000 iand i$10,000 ito ihis
iwidow iand idaughter, irespectively, iout iof ithe iestate's iincome, iduring ieach iyear iof ihis
iestate's iadministration. iThe iestate's idistributable inet iincome i(DNI) ifor ithe iyear iending
iDecember i31, i2023, iwas i$20,000. iCalculate ithe iamount iof iincome ieach iof ithe
ibeneficiaries iwill ireceive ion itheir iannual iK-1 ifrom ithe iestate.
Widow: i$10,000 iand iDaughter: i$10,000
Widow: i$15,000 iand iDaughter: i$5,000
Widow: i$20,000 iand iDaughter: i$-0-
Widow: i$-0- iand iDaughter: i$-0- i- iCorrect iAnswers i-Widow: i$15,000 iand iDaughter:
i$5,000
Beneficiaries iof ia isimple itrust imust iinclude iin itheir igross iincome ithe iamount iof ithe
iincome irequired ito ibe idistributed icurrently, iwhether ior inot idistributed, ior iif ithe iincome
irequired ito ibe idistributed icurrently ito iall ibeneficiaries iexceeds ithe idistributable inet
iincome i(DNI), ihis ior iher iproportionate ishare iof ithe iDNI.
Given ithat ithe iestate ihad i$20,000 iof idistributable inet iincome ito idistribute, ithe iamount
iof iincome ion ieach iof ithe iK-1s iwill ibe ias ifollows:
Widow's iK-1 iis i$15,000, iwhich iis i75% i($30,000 i÷ i$40,000) iof ithe iDNI iamount iof
i$20,000.
Daughter's iK-1 iis i$5,000, iwhich iis i25% i($10,000 i÷ i$40,000) iof ithe iDNI iamount iof
i$20,000.
Unless ian iextension iis ireceived, iForm i706 i(estate itax ireturn) igenerally imust ibe ifiled:
by ithe i15th iday iof ithe i4th imonth ifollowing ithe imonth iof ideath.
within i9 imonths iof ithe idate iof ideath.
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