Corey Owns All of the Stock of Blond Corporation Which

question 54

Multiple Choice

Corey owns all of the stock of Blond Corporation which includes both common and preferred shares.The preferred stock is noncumulative,has no redemption date,and possesses no liquidation preference.In 1995,Corey makes a gift to his adult children of all of the common stock.He dies in 2008 still owning the preferred stock.The value of the Blond stock on the relevant dates is:

One of the tax consequences of this estate freeze is:

• A)Corey's gross estate includes $0 as to the stock.
• B)Corey's gross estate includes $5,000,000 as to the stock.
• C)Corey made a gift of $3,000,000 in 1995.
• D)Corey made a gift of $3,400,000 in 1995.
• E)None of the above is correct.

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Definitions:

Common Stock

Equity ownership in a corporation, granting shareholders voting rights and a share in the company's profits via dividends, pertaining to the fundamental stake in the company’s equity.

Cash Dividend

A distribution of profits by a corporation to its shareholders in the form of cash.

Cash

Money in the form of coins or banknotes, especially that held by a person or business.

Stock Investments

Financial assets referring to shares purchased in other companies intended for income generation or capital gains.