Stacey Inherits Unimproved Land (Fair Market Value of $6 Million)

question 170

Multiple Choice

Stacey inherits unimproved land (fair market value of $6 million) from her father on June 1,2014.Stacey disclaims her interest in the property as follows: one-third on December 1,2014;one-third on January 3,2015;and the remaining one-third on May 31,2015.In all cases,the disclaimers pass the interest to her son (the next heir under state law) .The Federal gift tax applies to Stacey for:

• A)All of the disclaimers.
• B)The disclaimer made in 2014.
• C)The May 31,2015 disclaimer.
• D)All of the disclaimers made in 2015.
• E)None of the disclaimers.

---

Definitions:

Market Risk Premium

The extra return over the risk-free rate that investors require to compensate them for the risk of investing in the stock market.

Risk-free Rate

The return on an investment with no risk of financial loss, often associated with government bonds.

Required Return

The minimum expected yield by investors for providing capital to a company or project.

Betas

A measure of the volatility, or systematic risk, of a security or portfolio in comparison to the market as a whole, often used in the Capital Asset Pricing Model.