Martin Transfers Stock to an Irrevocable Trust and Names Himself

question 105

Multiple Choice

Martin transfers stock to an irrevocable trust and names himself to receive the trust income for life with the remainder interest gifted to his son. When Martin dies

• A)none of the stock will be included in Martin's estate.
• B)the stock's value at the time of transfer to the trust will be included in Martin's estate.
• C)the value of the stock less the present value of the income receivable by Martin will be included in Martin's estate.
• D)the value of the stock at death will be included in Martin's estate.

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Definitions:

Book Value

The value of an asset as recorded on the balance sheet, calculated as the cost of the asset minus any depreciation.

Proportionate Book Value

The valuation of an entity's share in an investment, calculated based on the proportionate share of the invested entity’s book value.

Deferred Income Tax Asset

A balance sheet item that represents the difference between taxes already paid or accrued and the expected future tax payment, indicative of taxes that will be recovered in future periods.

Separate Income Tax Returns

Tax documents filed individually by entities or persons instead of jointly or as part of a consolidated group.