Question #61 of 85 Leon has a gross estate estimated at $14.3 million. He is not married but does have two adult children who he wants to receive all of his estate. Leon is the sole owner of income-producing real estate valued at $900,000. He currently depends on the income produced by this real estate to maintain his standard of living. However, Leon is certain that when he retires in 10 years, at age 65, he will no longer need this income due to a generous income from a defined benefit retirement plan. Leon's financial planner has told Leon that his estate could face a severe liquidity crisis if in retirement. In which one of the following trusts would it be best for Leon to place his income-producing property in order to improve his estate's liquidity position in retirement?     A) An irrevocable charitable lead trust to last for 10 years that will pay the remainder to his children     B) An irrevocable trust to last for 10 years that will pay Leon a fixed percentage of the value of the trust assets as of January 1 of each year, with the remainder to his children (GRAT)     C) An irrevocable trust to last for 10 years that will annually pay Leon income at the trustee’s discretion, with the remainder to his children (GRIT)     D) A revocable trust to last for Leon’s lifetime, with all trust assets to be distributed to his children at his death

Question #69 of 85   Question ID: 1251873 Jordan (70) and Brianna (30) are now divorced. They had one child, Lucas. Despite their differences, Jordan and Brianna have stayed friends. Last year, since Brianna was unable to support herself financially, Jordan gave her $75,000 out of pure generosity. Which one of the following statements is correct regarding the generation-skipping transfer tax (GSTT)?     A) The transfer is subject to GSTT since Brianna is more than 37.5 years younger than Jordan.     B) The transfer is subject to GSTT as a non-skip transfer.     C) The transfer is not subject to GSTT since Brianna is Jordan's former spouse.     D) The transfer is subject to GSTT since spouses and former spouses are always treated as skip persons.

None

QUESTION 30 grandmother. The grandmother did not have any gift taxes due. Two years later. John sold the building for S40,000. What was his gain or (losa) on this transaction O $15,000 Gain O $2,500 Loss O $15,000 Loss O $2,500 Gain O No Gain or Loss

2

2

QUESTION 5  Howard and Raj are married out of community of property. The couple has two daughters, Penny (16) and Bernadette (28). Bernadette immigrated to Switzerland two years ago; she became a permanent resident of that country. Howard started a trust with their daughters as beneficiaries. Howard donated a house to the trust. The trust rents the house to tenants. The trust received R98,000 in rent for the year. The rent received was distributed to each daughter equally. Required With reference to legislation and reasons, calculate the amount to be included in the income of Howard and his daughters. Total M

2

#54 of 85   Question ID: 1251845 Last year, your client and his wife gave their adult son a one-third interest in a commercial office building. Each has a one-third interest as tenants in common. If your client dies while still owning the property as a tenant in common, an estate tax implication of this form of property ownership is that     A) one-third of the value of the property will be included in your client's gross estate.     B) one-half of the value of the property will be included in your client's gross estate.     C) the entire value of the property will be included in your client's gross estate because his estate cannot prove contribution by the other tenants in common.     D) your client's estate will be entitled automatically to a marital deduction of one-half of the date-of-death value.

11