American College Exam HS330 Topic 2 Question 96 Discussion

Actual exam question for American College's HS330 exam

Question #: 96
Topic #: 2

Generally the courts will accept as the federal estate tax value of a closely held corporate business the price established by a buy-sell agreement if all the following conditions are met EXCEPT:

AThe agreement requires the payment of liquidated damages to the survivors if the executor fails to carry out its terms.

BThe agreement as to per-share value is fair, adequate, and made at arm's length.

CThe agreement requires a deceased share holder's executor to sell the stock at the price specified in the agreement.

DThe agreement requires a shareholder to first offer his stock to the corporation or other shareholders at the specified price if he wishes to sell it during his lifetime.

Show Suggested Answer

Suggested Answer: A

by Pearlie at Sep 09, 2024, 01:13 PM

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Benton

2 months ago

Option A is the right answer, no doubt. Although, I'm sure there's a lawyer out there who could argue the other way and still get paid. Gotta love the legal system!

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Marti

1 months ago

The legal system can be so tricky sometimes, but that's why lawyers are there to help.

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Ilene

1 months ago

Lawyers always find a way to argue things, that's for sure.

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Cecil

1 months ago

I agree, option A is definitely the right answer.

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Tran

2 months ago

That makes sense, I see your point.

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Nguyet

2 months ago

I think the answer is D because it goes against the fair and arm's length requirement.

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Ressie

2 months ago

But doesn't the agreement requiring the payment of liquidated damages to survivors make it invalid?

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Irene

2 months ago

Honestly, I'm just impressed that anyone can keep track of all these legal technicalities. Where do they even come up with this stuff?

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Maia

1 months ago

Yeah, it's a good idea to consult with a professional to make sure everything is in order.

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Argelia

1 months ago

I know, it can be overwhelming trying to understand all the legal details.

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Weldon

1 months ago

It's definitely a lot to keep track of, but it's important for estate planning.

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Tran

2 months ago

I disagree, I believe the answer is C.

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Mel

2 months ago

Hah, option D is the best. Gotta love those shareholders who try to get out of the agreement by selling their stock during their lifetime. Nice try, but the courts aren't buying it!

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Wei

25 days ago

Agreed, the courts will see right through that.

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Hortencia

26 days ago

Definitely, can't have shareholders trying to sneak out of their agreements.

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Teddy

1 months ago

Yeah, it's important to have those safeguards in place.

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Lilli

2 months ago

I know right, option D really covers all the bases.

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Willard

3 months ago

I don't know, I think option B is the way to go. If the agreement is fair and at arm's length, that should be the key factor, right?

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Clemencia

2 months ago

Chun: I think they are important too, but option B is definitely a key factor.

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Rozella

2 months ago

But what about the other conditions? Do you think they are also necessary?

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Chun

2 months ago

Yeah, if the per-share value is fair and at arm's length, it should be accepted by the courts.

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Gail

2 months ago

I agree, option B seems like the most important condition.

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Tennie

3 months ago

Option A is clearly the correct answer. Why would the courts accept a buy-sell agreement that penalizes the executor for not following it? Seems like a no-brainer to me.

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Coleen

2 months ago

Yeah, it wouldn't make sense for the courts to accept a buy-sell agreement with liquidated damages.

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Troy

3 months ago

I agree, option A is the correct answer.

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Ressie

3 months ago

I think the answer is A.

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