Income in respect of a decedent (IRD) is specifically defined in the Internal Revenue Code, and supported by various Treasury regulations. (True/False). 2.DRD (Deductions

Income in respect of a decedent (IRD) is specifically defined in the Internal Revenue Code, and supported by various Treasury regulations. (True/False).

 

2.        DRD (Deductions in Respect of a Decedent) are deductible by the recipient of IRD only in the year the IRD is received. (True/False).

 

 

3.        IRD income subject to income taxes

 

a.            is not subject to the double taxation of estate taxes

b.            is subject to probate estate tax proceedings if income is subject to the highest estate tax permissible under law

c.             is also included in the federal taxable estate of the decedent

d.            specifically excludes zero-basis accounts receivable

 

 

4.        Rachel Realtor earned a commission of $38,000 on the closing of a strip shopping center mall just two weeks before her untimely death. Rachel never received the income. In this instance,

 

a.            only income after taxes, if Rachel was a cash taxpayer, would be considered IRD

b.            the full commission may be subject to income tax as IRD as well as being reflected as a taxable receivable on her estate tax return

c.             there is no right to receive the income by the ultimate recipient

d.            no double taxation of any IRD can apply

5.        The starting point for basis is the amount that is paid for an asset and carrying over from year to year is not a factor in determining depreciation calculations. (True/False).

 

6.        "Exchanged basis" is a term commonly applied in situations whereby a taxpayer has acquired property through a "like-kind' exchange. (True/False).

 

7.        Under current law, when an investor dies (in a year other than 2010) the beneficiary of his property

 

a.   has a basis measured by the property's fair market value on the date of death

b.   must waive any alternative valuation date for estate tax purposes

c.    cannot realize a gain in terms of the property's value

d.   pays only capital gain, not ordinary income, taxes on the appreciation of the property

 

 

8.  Jim purchased land for $100,000. At the time of his death, the land had a fair market value of $150,000. The beneficiary of the land sells the land for $160,000. How much gain does the beneficiary have to recognize?

a.            0

b.            $10,000

c.             $50,000

d.            $60,000

9.  Jake purchases stock for $5,000. After it appreciates in value to $10,000, he gives it to Joan. Joan turns around and sells the stock for $12,000. How much gain does Joan have to recognize?

e.            $0

f.              $2,000

g.            $5,000

h.            $7,000

 

10.     Janet purchases land in a nearby town in July, 2018 for $15,000 and resells the same property for $27,400 in September, 2018. Upon the sale of this land

 

a.   a long-term capital gain is realized, but basis must include, as part of its calculation, the amount paid by the seller of the property to Irene

b.   a short-term capital gain of $12,400 is realized

c.    the tax effect of the sale is such that ordinary income tax will be paid on $27,400 minus the original cost of the property plus any tax paid on the original down payment

d.   no gain is realized until after twelve months have passed; however, ordinary income tax will have to be paid on the sum of $27,400 minus $15,000

These are multiple choice