Which of the Following Independent Statements Correctly Reflects the Valuation

question 125

Multiple Choice

Which of the following independent statements correctly reflects the valuation rules applicable to estate and gift taxes?

• A)In valuing an annuity issued by Prudential Insurance Company, use the tables issued by the IRS.
• B)In valuing an unmatured life insurance policy on which further premiums need to be paid, use the policy's interpolated terminal reserve amount.
• C)In valuing a note receivable, the issuer's bankruptcy should not be taken into account.
• D)In valuing a used car, use the trade-in value offered by a dealership as a down payment on a new model.
• E)None of the above statements is correct.

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Definitions:

Cash Dividend

A payment made by a corporation to its shareholders, usually in the form of cash, as a share of the company's current earnings.

Declaration Date

The specific date on which a company's board of directors announces the issuance of a dividend.

Date Of Record

The cut-off date established by a company in order to determine which shareholders are eligible to receive a dividend or distribution.

Preferred Shares

A class of ownership in a corporation that has a higher claim on the company's assets and earnings than common shares, usually with fixed dividends.