1. A taxable entity separate from the decedent and comes into being with the death of the individual. It exists until the final distribution of its assets to the heirs and other beneficiaries.
A. A survivor.
B. An
executor.
C.
An estate.
D. None
of the above.
2. Every domestic estate with gross income of _____ or more during a tax year must file a Form 1041.
A. $ 400.
B. $
600.
C.
$ 800.
D. None
of the above.
3. Estates may have to pay federal income tax. Beneficiaries may have to pay tax on their share of estate income resulting in a double tax.
True False
4. As a personal representative, you must furnish a statement to the beneficiary by the date on which the Form 1041 is filed. Failure to provide this payee statement can result in a penalty of $50 for each failure. You must furnish a
A.
Schedule K-1 (Form 1041).
B.
Schedule R-1 (Form 1040).
C.
Form W-2 (Form 1041).
D.
Schedule 3 (Form 1041).
5. An estate can elect to treat the cost of certain depreciable business assets as an expense under Section 179.
True False
6. This is the act of giving or leaving property to another through the last will and testament.
A. Bequest.
B.
Nominee.
C.
Administrate.
D.
Carryover.
7. Gross income of an estate consists of all items of income received or accrued during the tax year. It includes the following, except
A.
Dividends, interest, rents and royalties.
B. Gain
from the sale of property.
C.
Income from business, partnerships, trusts and any other sources.
D.
None of the above.
8. An estate may qualify to claim a deduction for estate taxes if the estate must include in gross income for any tax year an amount of income in respect of a decedent.
True False
9. An estate recognizes gain or loss on a distribution of property in kind to a beneficiary only if
A. The
distribution satisfies the beneficiary's right to receive a specific dollar
amount (in cash or in unspecified property or both).
B. The
distribution satisfies the beneficiary's right to receive a specific property
other than the property distributed.
C.
You choose to recognize the gain or loss on the estate's income tax return.
D. Any
of the above.
10. If you choose to recognize gain or loss, the choice applies to all non-cash distributions during the tax except charitable contributions and specific bequests. To make the election, report the transaction on
A.
Schedule C (Form 1041).
B.
Schedule E (Form 1041).
C.
Schedule D (Form 1041).
D.
None
of the above.
11. Susan Jamison died on March 21, 2008, before filing her 2007 tax return. Her personal representative must file her 2007 return by April 15, 2008. Her final tax return is due
A. June
21, 2008.
B.
April 15, 2009.
C.
January 31, 2009.
D.
December 31, 2008.
12. The primary duties of a personal representative are to collect all the decedent's assets, pay the creditors, and distribute the remaining assets to the heirs or other beneficiaries. The personal representative also must
A.
Apply for an employer identification number (EIN) for the estate.
B.
File any income tax return and the estate tax return when due.
C.
Pay the tax determined up to the date of discharge from duties.
D.
All of the above.
13. Generally, if the decedent died during 2008, an estate tax return (Form 706) must be filed if the gross estate is more than $2,000,000.
True False
14. You can request an automatic 6-month extension of time to file Form 1041, U.S. Income Tax return for Estates and Trusts by filing Form 7004.
True False
15. An executor, administrator, or anyone who is in charge of the decedent's property, normally named in a decedent's will to administer the estate and distribute properties as the decedent has directed.
A. A
manager of an estate.
B. A personal representative of an estate.
C. A relative of the decedent.
D.
All of the above.
16. You are liable for a penalty for
A. Failure to file a tax return when due unless the failure is due to reasonable
cause.
B. Not including the EIN or the taxpayer identification number of another person
where it is required on a return, statement, or other document, unless you can
show reasonable cause.
C. Not giving the taxpayer identification number of another person when required
on a return, statement or other document.
D.
Any of the above.
17. This person is any person acting for another person. This term applies to persons who have positions of trust on behalf of others such as a personal representative for a decedent's estate.
A.
An attorney.
B. An advocate.
C. A fiduciary.
D.
All of the above.
18. If you are appointed to act in any fiduciary capacity for another, you must file a written notice with the IRS stating this. You should file the written notice as soon as all of the necessary information is available. It notifies the IRS that, as a fiduciary, you are assuming the powers, rights, duties, and privileges of the decedent. This allows the IRS to mail to you all tax notices concerning the person (or estate) you represent. This notice is filed on
A. Form 4810.
B. Form 1310.
C. Form 1041.
D. Form 56.
19. Once the executor is discharged from personal liability, the IRS will no longer be able to assess tax deficiencies against the executor even if he or she still has any of the decedent's property.
True False
20. When filing the decedent's final income tax return, attach the death certificate or other proof of death to the final return.
True False
21. If you are a surviving spouse and have received a tax refund check in both your name and your deceased spouse's name,
A. Return the
joint-name check to your local IRS office or the service center where you mail
your return.
B. Return the
joint-name check and a completed Form 1310 to your local IRS office or the
service center where you mailed your return and a new check will be issued in
your name and mailed to you.
C. Sign the check
and alongside your signature write "Surviving spouse" before you cash or deposit
your check.
D. You cannot
cash the check, but instead you must sign it over to the fiduciary of your
spouse's estate so he or she can distribute it accordingly.
22. If the decedent was a shareholder in an S corporation, include on the final return the decedent's share of the S corporation's items of income, loss, deduction, and credit for
A. The corporation's
tax year that ended within or with the decedent's final tax year.
B. The
corporation's tax year that ended on the year ending on the date of death.
C. The period, if
any, from the end of the corporation's tax year in to the decedent's date of
death.
D. Any of the
above.
23. The death of a partner closes the partnership's tax year for that partner. Generally, it does not close the partnership's tax year for the remaining partners. On the decedent's final return, include the decedent's distributive share of partnership items for
A. The partnership's
tax year that ended within or with the decedent's final tax year.
B. The period, if
any, from the end of the partnership's tax year in to the decedent's date of
death.
C. The period the
partnership's year ended.
D. Both A and B
above.
24. The credit for the elderly is allowable on a decedent's final income tax return if the decedent
A. Was a "qualified
individual".
B. Had income
(Adjusted gross income (AGI) and nontaxable social security and pensions) less
than certain limits.
C. Had net earnings
of $400 or more.
D. Both A and B
above.
25. The Victims of Terrorism Tax Relief Act of 2001 (The Act) provides tax relief for those injured or killed as a result of terrorist attacks, certain survivors of those killed as a result of terrorist attacks, and others who were affected by terrorist attacks. Under The Act, the federal income tax liability is forgiven for those killed in
A. The April 9,
1995, terrorist attack on the Alfred P. Murrah Federal Building (Oklahoma City).
B. The September
11, 2001, terrorist attacks.
C. The Anthrax
terrorist attacks occurring after September 10, 2001, and before January 1,
2002.
D. Any of the
above.
26. The Victims of Terrorism Tax Relief Act of 2001 (The Act) provides tax relief for those injured or killed as a result of terrorist attacks, certain survivors of those killed as a result of terrorist attacks, and others who were affected by terrorist attacks.
True False
27. The decedent's income tax liability is forgiven if, at death, he or she was a military or civilian employee of the United States who died because of wounds or injury incurred
A. While a U.S.
employee.
B. In a
military action.
C. In a terrorist
action.
D. Any of the
above.
28. The income tax liability of a civilian employee of the United States who died in 2008 because of wounds incurred while a U.S. employee in a terrorist attack that occurred in 1998
A. Will be forgiven for 2008.
B. Will be forgiven for all prior tax years in the period 1997 through 2007.
C. Will not be forgiven for 2008.
D. Both A and B above.
29. To minimize the time needed to process the decedent's final return and issue any refund,
A. Be sure to write "DECEASED", the decedent's name, and the date of death across the top
of the tax return.
B. If you are the decedent's spouse filing a joint return with the decedent and
no personal representative has been appointed, write "Filing as surviving
spouse" in the area where you sign the return.
C. If no personal representative has been appointed and if there is no surviving
spouse, the person in charge of the decedent's property must file and sign the
return as "personal representative".
D. Any of the above.
30. The proceeds from a decedent's life insurance policy paid by reason of his or her death generally are includable in taxable income.
True False