$1.$ A client wants to sell his interest in the family business to his son. He wants to understand the consequences of using different intra$$family techniques to accomplish his objective. Which statement is NOT correct?

Group of answer choices

With an installment sale, taxable gains are prorated over the payment period and the client would report the gain and interest as installment payments are received.

A self$$cancelling installment note $($SCIN$)$ would be more appropriate if the client was ill and had a short life expectancy.

A bargain sale would allow the client to sell the business to his son below fair market value without recognizing any capital gain.

A private annuity could be structured with the client's son to provide the client with payments for life based on his life expectancy and current IRS interest rates.

$2.$A client had appreciating stock worth $$500,000$ and a basis of $$100,000$ that he transferred to a CRAT. The CRAT invested the proceeds in bonds paying $5\%$ per year. The client will receive the income for life. Which statement about this transaction is correct?

Group of answer choices

If the client had sold the stock outside of the trust he would have paid a capital gains tax and received less annual income if the proceeds were invested in the same $5\%$ bonds.

The client will receive an income tax charitable deduction based on the present value of the gift that passes to charity.

The income that the client receives from the CRAT is tax$$free because it is invested and distributed by the charity.

If the income the trust receives is greater than the amount paid out to the client in any given year, the trustee can distribute the excess income to the client at a later time when he is in a lower income tax bracket.

$3.$Charlie and Amanda are married and Charlie has an estate worth $$12$ million. Charlie has executed a simple will that leaves all of his property to his wife Amanda at his death. Charlie's attorney has explained the estate tax benefits of equalizing the couple's estate. Assume for this example that Charlie dies first, the estate assets do not change in value, and Amanda does not remarry. Which of the following statements is not correct?

Group of answer choices

If Charlie does not change his estate plan, there will be no estate tax due at his death but Amanda's estate would be subject to an estate tax.

If Charlie equalizes his estate by gifting one$$half to Amanda, this is a terminable$$interest gift, and a marital deduction is not available to offset the tax.

If Charlie gifts one$$half of his estate to Amanda before his death and both spouses establish bypass trusts for one another, then Charlie and Amanda's estate would pay some federal estate tax at each spouse's deaths.

Using estate equalization, the combined amount of the couple's taxes would be lower than the amount Amanda would pay at her death on property she received by marital deduction from Charlie's estate.

$4.$Juanita and her son Ricardo want to purchase rental property together and Juanita will contribute $70$ percent of the purchase price. They expect to receive $$4,000$ a month as rental income. They are looking into the advantages and disadvantages of titling the property as JTWROS or as tenants in common. Which of the following statements regarding these forms of ownership is not correct?

Group of answer choices

An advantage of titling the property as JTWROS is that it will avoid probate at the first tenant's death.

If the property is titled as JTWROS and Juanita allows Ricardo to keep the rental income, she is making a gift of $$2,000$ a month to him which is subject to gift taxes.

If the property is titled as a tenancy in common and Juanita allows Ricardo to keep the rental income, she is making a taxable gift of $$33,600$ a year to him which is reduced by her gift tax annual exclusion.

A disadvantage to tiling the property as JTWROS is that Juanita must make a gift to Ricardo of $20$ percent of the purchase price of the property because each joint tenant must own equal shares.