$1.$Christy, Nadine, and Rachael started an event planning company together six years ago. Each shareholder owns $100$ shares of stock in this closely held corporation. Several years ago they entered into a cross$$purchase agreement and purchased life insurance policies on each other's lives. Nadine has been diagnosed with a terminal illness and is not expected to live beyond this year. Which statement would correctly describe the consequences of the cross$$purchase agreement at Nadine's death?

Group of answer choices

Christy and Rachael would use the proceeds from the life insurance policy they own on Nadine's life to purchase $50$ percent of the stock from Nadine's estate.

The value of the life insurance policies that Nadine owns on Christy and Rachael's lives would not be included in Nadine's gross estate at her death.

If Christy and Rachael purchased the life insurance policies on their own lives from Nadine's estate, the policies would be subject to future income taxes under the transfer for value rule.

The purchase of stock by the surviving shareholders is treated as dividends in Nadine's estate.

$2.$Which of the following statements regarding life insurance policies is not correct?

Group of answer choices

A life insurance policy that is payable to the owner$/$insured$\text{'}$s estate is included in the owner's gross estate and probate estate at death.

A life insurance policy owned by the insured that is payable on death $($POD$)$ to the spouse is included in the owner's gross estate but is not subject to probate.

An owner of a life insurance policy who is not the insured will include the value of the policy in the gross estate at death and the policy will go through probate.

A life insurance policy was transferred by the owner to a spouse four years ago but the insured retained the right to change the beneficiary. The death benefit of this policy is not included in the insured's gross estate.

$3.$Your clients, a married couple, are very wealthy and they want to transfer substantial assets to their grandchildren by QTIP trust at the surviving spouse$$s death. Assuming the husband passes away first, which statement regarding a reverse QTIP election is NOT correct?

Group of answer choices

Husband$$s executor must make a reverse QTIP election on his federal estate tax return.

With a reverse QTIP election, the surviving spouse $($wife$)$ is treated as the transferor for GST tax purposes.

A reverse QTIP election allows husband$$s GST exemption to be fully utilized to offset future GST taxes from the trust.

A reverse QTIP preserves the wife$$s GST exemption to offset future taxable gifts to the grandchildren outside the trust.

$4.$Casey has a gross estate valued at $$15\mathrm{.}2$ million and he is in the highest marginal tax bracket. He wants to gift some property to his daughter Kim to reduce the value of his gross estate at death. Which property is most appropriate to gift?

Group of answer choices

A vacation home in Maine worth $$1$ million that Casey inherited from his father with a basis of $$400,000.$ Kim and her family love this home and would never sell it$.$

Two rental cottages that Casey owns and manages that he bought for $$320,000,$ which are now worth $$1$ million. Kim and her husband do not want to manage the cottages after Casey's death, and they plan to sell them when he dies.

Stocks valued at $$850,000$ that Casey bought for $$1,000,000.$

Business equipment worth $$1$ million that generates depreciation deductions on Casey's personal income tax return.