Enrolled Agent - INDIVIDUALS 2024-2025
Exam Questions with Latest Update
When must Form 706-GS(T) be filed by a trustee for a trust that has a taxable
termination? - Answer-By April 15 of the year following the calendar year of termination
In general, the trustee of any trust that has a taxable termination must file Form 706-
GS(T) for the tax year in which the termination occurred.
Pursuant to Form 706-GS(T) Instructions, page 1, the trustee must file Form 706-GS(T)
by April 15 of the year following the calendar year of termination. However, if the due
date falls on a Saturday, Sunday, or legal holiday, the filing is due on the next business
day.
Instructions for Form 706-GS(T)
Mr. Alexis died April 30, 2023. His gross estate totaled $11.6 million. Assuming that no
extension is granted, the executor must file Form 706, United States Estate (and
Generation-Skipping Transfer) Tax Return, on or before: - Answer-No estate tax return
is filed.
For decedents dying in 2023, Form 706 must be filed by the executor for the estate of
every U.S. citizen or resident:
whose gross estate, plus adjusted taxable gifts and specific exemption, is more than
$12,920,000 or
whose executor elects to transfer the decedent's unused exclusion (DSUE) amount to
the surviving spouse, regardless of the size of the decedent's gross estate.
If the executor must file Form 706 to report estate and/or generation-skipping transfer
tax, it is due within 9 months after the date of the decedent's death unless an extension
of time to file has been granted. An automatic 6-month extension of time to file is
requested by filing Form 4768.
In this case, January 30 of the following year is the 9-month limit.
Form 706, however, is not filed in this case because the value of the estate is below
$12,920,000, which is the threshold amount for requiring the filing of an estate form.
When Lisa's husband died in 2020, he set up a qualified terminable interest property
(QTIP) trust, naming Lisa as the beneficiary for her life. What is the value of Lisa's gross
estate if she should die, given the following information?
FMV on Date of Death
Lisa's revocable grantor trust $3,750,000
QTIP trust 1,000,000 - Answer-$4,750,000
The gross estate includes all property in which the decedent had an interest (including
real property outside the United States). It also includes:
,certain transfers made during the decedent's life without an adequate and full
consideration in money or money's worth;
annuities;
the includible portion of joint estates with right of survivorship;
the includible portion of tenancies by the entirety;
certain life insurance proceeds (even though payable to beneficiaries other than the
estate);
digital assets;
property over which the decedent possessed a general power of appointment;
dower or curtesy (or statutory estate) of the surviving spouse; and
community property to the extent of the decedent's interest as defined by applicable
law.
Additionally, any "QTIP" property received from a pre-deceased spouse must be
included in the gross estate.
Which of the following is not a credit against gross estate tax in determining net estate
tax?
Foreign death taxes
Qualified charitable contributions
Unified credit (applicable credit amount)
None of the answer choices are correct. - Answer-Qualified charitable contributions
Form 706, Part 2, line 3a, provides that an estate will arrive at the tentative taxable
estate by subtracting total allowable deductions (not credits) from Part 5 (Form 706, line
2) against their gross estate. As applicable in this question, the following expense (Form
706, Part 5) is permitted as a deduction:
Charitable bequest (Schedule O, Form 706)
Additionally, estates are allowed to take certain credits (Part 2, lines 9a to 9e and line
15 of Form 706) against the gross estate which include but are not limited to foreign
death taxes, the credit for tax on prior transfers (Form 706 Instructions, page 10), and
the unified credit (applicable credit amount) on line 11.
As such, the charitable contribution is a deduction and not a credit.
What type of provision is available for requesting an extension of time to pay the tax
liability associated with Form 706-GS(D), Generation-Skipping Transfer Tax Return for
Distributions?
An automatic 2-month extension is available.
An automatic 4-month extension is available.
An automatic 6-month extension is available.
No extension is available. - Answer-An automatic 6-month extension is available.
John is a single taxpayer who died during the current tax year. Based on the following
information, determine the value of John's gross estate.
,FMV on Date of DeathLife insurance on John's life(payable to John's estate)
$7,250,000John's revocable grantor trust 1,900,000Stock given to John's son in 2023
(no gift tax was paid) 50,000 - Answer-$9,150,000
The gross estate includes all property in which the decedent had an interest (including
real property outside the United States). It also includes:
certain transfers made during the decedent's life without an adequate and full
consideration in money or money's worth;
annuities;
the includible portion of joint estates with right of survivorship;
the includible portion of tenancies by the entirety;
certain life insurance proceeds (even though payable to beneficiaries other than the
estate);
digital assets;
property over which the decedent possessed a general power of appointment;
dower or curtesy (or statutory estate) of the surviving spouse; and
community property to the extent of the decedent's interest as defined by applicable
law.
How is a carryover NOL that is passed through to a beneficiary deducted on the
beneficiary's return?
As a miscellaneous itemized deduction subject to the 2% floor
As an adjustment to adjusted gross income
As an adjustment to capital gains income
As a miscellaneous itemized deduction not subject to the 2% floor - Answer-As an
adjustment to adjusted gross income
Any unused net operating loss carryover or capital loss carryover existing upon the
termination of an estate is passed through to the beneficiaries of the estate. The
carryovers will be claimed on the beneficiary's tax return. This treatment is allowable
only if the carryover would have been allowed to the estate in a later tax year if the
estate had not been terminated.
Both types of carryovers generally keep their same character for the beneficiary as they
had for the estate. The net operating loss carryover and the capital loss carryover are
used in figuring the beneficiary's adjusted gross income and taxable income. Hence, it is
an adjustment to AGI.
If the beneficiary of a capital loss carryover is a corporation, the corporation will treat the
carryover as a short-term capital loss regardless of its status in the estate.
Which of the following items generally is included in a person's estate?
1. The transfer of title to property to another individual whereby the decedent retains the
right to the use of the property during his or her lifetime
2. The receipt of annuity income by the decedent
3. The interest in community property ownership by the decedent - Answer-1, 2, and 3
, The gross estate includes all property in which the decedent had an interest (including
real property outside the United States). It also includes:
certain transfers made during the decedent's life without an adequate and full
consideration in money or money's worth;
annuities;
the includible portion of joint estates with right of survivorship;
the includible portion of tenancies by the entirety;
certain life insurance proceeds (even though payable to beneficiaries other than the
estate);
digital assets;
property over which the decedent possessed a general power of appointment;
dower or curtesy (or statutory estate) of the surviving spouse; and
community property to the extent of the decedent's interest as defined by applicable
law.
The terms of John's will require annual payments of $30,000 and $10,000 to his widow
and daughter, respectively, out of the estate's income, during each year of his estate's
administration. The estate's distributable net income (DNI) for the year ending
December 31, 2023, was $20,000. Calculate the amount of income each of the
beneficiaries will receive on their annual K-1 from the estate.
Widow: $10,000 and Daughter: $10,000
Widow: $15,000 and Daughter: $5,000
Widow: $20,000 and Daughter: $-0-
Widow: $-0- and Daughter: $-0- - Answer-Widow: $15,000 and Daughter: $5,000
Beneficiaries of a simple trust must include in their gross income the amount of the
income required to be distributed currently, whether or not distributed, or if the income
required to be distributed currently to all beneficiaries exceeds the distributable net
income (DNI), his or her proportionate share of the DNI.
Given that the estate had $20,000 of distributable net income to distribute, the amount
of income on each of the K-1s will be as follows:
Widow's K-1 is $15,000, which is 75% ($30,000 ÷ $40,000) of the DNI amount of
$20,000.
Daughter's K-1 is $5,000, which is 25% ($10,000 ÷ $40,000) of the DNI amount of
$20,000.
Unless an extension is received, Form 706 (estate tax return) generally must be filed:
by the 15th day of the 4th month following the month of death.
within 9 months of the date of death.
within 6 months of the date of death.
no later than the due date of the estate income tax return. - Answer-within 9 months of
the date of death.
Unless an extension of time to file Form 706 has been received, the estate tax return
must be filed within 9 months after the date of the decedent's death.
