1. An Executor would not price an asset at the lowest possible valuation for federal income tax purposes because:
a) In a buy-sell agreement the higher valuation would be provide more cash for the decedent’s survivors rather than to establish a formula that provides a lower estate tax value yielding a lower price for decedent’s business interest.
b) An Executor always would value the estate at the lowest possible valuation for federal income tax purposes which does not have to match a buy-sell agreement because the agreement may be more or less than a willing arms length buyer would pay for the decedent’s interest.
c) In a buy-sell agreement the lower valuation would be provide more cash for the decedent’s survivors rather than to hire an appraiser that provides a lower estate tax value and could be challenged by the Internal Revenue Service.
d) All of the above
2. George Smith dies this year, and his estate consists primarily of a 1,000-acre family farm. Farms of this size rent for $84,000 annually in the area near the Smith farm. Local real estate taxes are $8,000 and the average federal land bank loan interest rate is 8 percent. Under the farm-method valuation formula, what is the special-use valuation of the Smith farm?
a) $765,000
b) $880,000
c) $950,000
d) None of the above
3. In the Hilton family: If Richard gives Kathy a special power of appointment in favor of Paris Hilton than what are each of these people called:
a) Donor, donee & recipient.
b) Grantor, power holder & beneficiary.
c) Fool, sucker and lucky.
d) All of the above
4. The valuation of an estate occurs when?
a) When the decedent dies.
b) When the decedent died or six months later whichever is lower.
c) When the decedent died or six months later whichever the estate chooses..
d) All of the above