General Review - Questions v2

Question 1

Does a power of attorney survive death?

Answer 1

NO

Question 2

Is a former spouse considered a skip person for GST?

Answer 2

NO

Question 3

Will QTIP or reverse QTIP trust assets be included in the gross estate of the surviving spouse at their death?

Answer 3

YES in both cases

Question 4

If you make an interest-free demand loan to someone that is less than $100k, what is the total amount of imputed interest you could incur for gift tax purposes?

Answer 4

Cannot exceed the donee’s net investment income if their net investment income is >= $1,000 (if less than $1,000 then nothing)

Question 5

What assets don’t receive a stepped-up basis at the time of death?

Answer 5

IRD (installment notes, annuity payments, etc.) and retain their tax characteristics

Question 6

Tenancy by entirety is only available for _____

Answer 6

married couples

Question 7

If you gift appreciated property, the donee’s basis is the _____ at the time of gift and their holding period is _______

Answer 7

donee’s basis is the donor’s basis and they also get their carryover holding period

Question 8

If you gift loss property and then it is sold for a gain, the donee’s basis is the ____ at the time of the gift and their holding period is ______

Answer 8

basis is the donor’s basis at time of the gift and their holding period is the carryover period from the donor

Question 9

If you gift loss property and then it is sold for a loss, the donee’s basis is the _____ at the time of the gift and their holding period is ______

Answer 9

basis is FMV and holding period starts over at the time of the gift

Question 10

Would a single life annuity in one person’s name be included in their gross estate?

Answer 10

NO - has no further value when that person dies

Question 11

If you were to gift your son a house 10 years before your death but lived in it pursuant to an agreement with your son, would that house be included in your gross estate at death?

Answer 11

YES because you maintained a life interest in the property

Question 12

If a spouse receives a bequest of income from a CRAT or CRUT and is the ONLY income beneficiary, do those trust assets qualify for the marital deduction?

Answer 12

YES

Question 13

The “unholy” trinity refers to what?

Answer 13

when three different people on a life insurance policy are the owner, insured, and beneficiary

Question 14

If you buy a life insurance policy on someone else and name a third person as the bene, and then the insured dies, how is the death benefit taxed?

Answer 14

as a gift made to the third person

Question 15

You only are allowed to add a portion of gift taxes paid on a gift of _______ property

Answer 15

GAIN GAIN GAIN GAIN GAIN

Question 16

Can you gift split even if one spouse has no assets of their own to gift?

Answer 16

YES

Question 17

Is portability of the estate exclusion available to non spouses?

Answer 17

NO - portability only for spouses

Question 18

Is a bequest in a will subject to gift tax?

Answer 18

NO

Question 19

Is a transfer to a revocable trust with a remained interest a taxable gift to the remainderman?

Answer 19

NO - not a completed gift

Question 20

If you open a joint bank account and instruct the non-contributing party to NOT draw from it until you die, is that considered a taxable gift when you open and fund the account?

Answer 20

NO - not until the non-contributing party draws on the account for their own benefit

Question 21

Short term disability generally provides coverage for up to _____, LT disability generally for ______ or until ______

Answer 21

ST - 2 years

LT - 2 or more years and until a certain age (usually 65)

Question 22

Is a van over 10,000 lbs available to be covered under a PAP?

Answer 22

NO

Question 23

If you buy a van and use it as a delivery vehicle for your business, can that be covered under your PAP?

Answer 23

NO

Question 24

If a husband leaves his estate to a trust with his wife as the income beneficiary and with a limited (special) power of appointment (e.g. the right to distribute trust assets to their children), does that qualify for the marital deduction?

Answer 24

NO - that is a terminable interest. Would have to be a general power of appointment so she could benefit from it. Keeps it out of the wife’s estate at death as well.

Question 25

If a trust is revocable, who gets taxed on the income?

Answer 25

The grantor

Question 26

Deductible personal casualty losses are limited to those caused be a federal disaster are deductible to the extent they exceed ____ and _____ of AGI (lesser of assets basis or decrease in FMV)

Answer 26

$100 and 10% of AGI Formula = loss - insurance reimbursement - $100 - 10% of AGI

Question 27

Are losses allowed for bad business debt?

Answer 27

NO

Question 28

A target defined benefit plan is a defined _____ plan with ______ accounts

Answer 28

defined contribution plan with individual participant accounts

Question 29

A forfeitures in a target benefit plan counted toward the annual additions limit?

Answer 29

YES

Question 30

When exchanging/trading property in like-kind, if the property is primarily held for sale what is the treatment of gain?

Answer 30

must recognize any gain or loss in an exchange held primarily for sale

Question 31

The grantor of a trust is taxed on income from the trust when the income is used for the ______

Answer 31

grantor's benefit (which would include an obligation of support)

Question 32

Ordinary losses result from something other than the sale or exchange of _____ assets

Answer 32

capital

Question 33

Do you recognize ST or LT losses first? (if you have net losses)

Answer 33

ST

Question 34

Worthless securities are treated as having become worthless at the end of the year and are treated as ______

Answer 34

long term capital losses

Question 35

To avoid an underpayment penalty, taxpayers must make estimated payments that are the lesser of (i) _____ of the tax liability on the current year return or (2) _____ of the liability on the prior year return if AGE is _____ (MFJ) or less. If above that threshold, must pay at least _____% of prior year liability to avoid the PENALTY and INTEREST

Answer 35

Less than $150k MFJ - 90% current year - 100% prior year More than $150k MFJ: - 110% prior year

Question 36

For home office expenses, what is the % deduction?

Answer 36

10%

Question 37

Is an executor required to deposit any cash into an estate checking account as soon as the assets are released to the estate?

Answer 37

YES

Question 38

Does Tenancy in common avoid probate? Does it avoid tax consequences with unequal contributors?

Answer 38

DOES NOT avoid probate, DOES avoid tax issues with unequal contributors

Question 39

Does a bequest of a life estate qualify for the marital deduction?

Answer 39

NO

Question 40

To utilize the GSTT exemption, a ____ election must be made if grandchildren are the remainder beneficiaries

Answer 40

reverse QTIP

Question 41

To qualify for special use valuation, the value of real property in an estate has to amount to _____% or more of the gross estate

Answer 41

25%

Question 42

To qualify to pay estate taxes on an installment basis, share of the business must be less than ______% of the adjusted gross estate

Answer 42

less than 35%

Question 43

What assets in an estate don't receive a step up basis?

Answer 43

IRD (installment notes, annuities, etc.)

Question 44

If a surviving spouse receives an income interest from a CRAT or CRUT and is the ONLY beneficiary, does that qualify for the marital deduction?

Answer 44

YES

Question 45

Is a gift tax return necessary if you elect gift-splitting and the amount is under $30k?

Answer 45

YES - always required when gift-splitting is elected

Question 46

IF you transfer a life insurance policy to an ILIT within 3 years of death, is that included in the gross estate?

Answer 46

YES - any transfer within 3 years of life insurance is included

Question 47

For Roth IRAs, the 5 year period begins _____ of the taxable year for which the first ______ was made

Answer 47

begins Jan 1 for the taxable year for which the first contribution was made

Question 48

Does Coverage D for HO policies (uninhabitable coverage) cover fair rental value and cost of meals?

Answer 48

YES

Question 49

If assets are held in a revocable trust and the grantor dies, do the assets receive a stepped-up basis? are they included in the gross estate?

Answer 49

YES receive stepped-up basis and YES are included in gross estate

Question 50

Can a profit-sharing plan be established after the close of the employer-sponsor tax year?

Answer 50

NO

Question 51

Can a SEP be established after the close of the employer-sponsor tax year?

Answer 51

YES - up until tax return due date

Question 52

To claim someone as a dependent, must provide more than ____% of support

Answer 52

50%

Question 53

If you pay more than 50% of support for a married child and they were NOT required to file a return, can you claim them as a dependent?

Answer 53

YES

Question 54

Are distributions from a HSA that are not used for qualifying medical expenses always subject to income and penalty tax, regardless of account holder's age?

Answer 54

NO - if they are over 65 years old they are not

Question 55

Are FSA contributions subject to FICA taxes?

Answer 55

NO

Question 56

Are FSAs funded through salary reductions?

Answer 56

YES

Question 57

Can you take FSA contributions and put them towards an HSA?

Answer 57

NO

Question 58

Can you take a loan from a 401(k) after separating from service?

Answer 58

NO

Question 59

What is the use requirement for taking a home office deduction?

Answer 59

must be regularly and EXCLUSIVELY used as a principal place of business

Question 60

When is a Section 2503(c) trust required to make a distribution for the minor who is the beneficiary?

Answer 60

age 21

Question 61

Under the Fair Credit Billing Act, how much are you responsible for, per card, if your credit cards are stolen?

Answer 61

$50 per card (or the lesser of fraudulent charges made)

Question 62

If there is a liability resulting form the operation of a motor vehicle, is that covered under any homeowners or renterse policy?

Answer 62

NO

Question 63

Can you exchange a series EE bond for a series I bond?

Answer 63

NO

Question 64

The Dependent Care Credit is limited to $3,000 for one dependent and $6,000 for two, and further limited to _____ for taxpayers whose AGI is above $43,000

Answer 64

20%

Question 65

The liquidity preference theory states that the bond curve will look ______ because investors will pay a premium (lower yield) for short term bonds

Answer 65

upward sloping

Question 66

The market segmentation theory of bond prices states that the yield curve could adopt ______, based on supply and demand

Answer 66

any shape

Question 67

The expectations theory for bond prices states that long term rates are just a series of ______

Answer 67

short term rates

Question 68

BOE insurance provides _____ premiums and _____ benefits (taxes)

Answer 68

deductible premiums and taxable benefits

Question 69

Is a coin collection illiquid?

Answer 69

YES

Question 70

If you die before an installment note is finished paying, what is included in your gross estate?

Answer 70

the unpaid principal balance and any unpaid accrued interest as of the DOD

Question 71

A pooled income fund is like a ____ or _____ but is managed by the ______

Answer 71

CRAT or CRUT, but is managed by the charity

Question 72

The gift value of a term life insurance policy is the _______

Answer 72

unearned premium at the date of gift

Question 73

Section 1244 stock entitles the owner to receive up to _______ in ordinary losses instead of capital losses (per year)

Answer 73

$100,000

Question 74

Are worker's comp benefits taxed for federal income tax?

Answer 74

NO - federal income tax free

Question 75

How long do you have to receive social security disability benefits before becoming eligible for Medicare?

Answer 75

24 months

Question 76

Do MBSs provide fixed payments?

Answer 76

NO - any prepayments are passed on to the MBS holders

Question 77

Can a pooled income fund invest in tax-free munis?

Answer 77

NO

Question 78

Are qualified private activity bonds tax free income?

Answer 78

YES

Question 79

What is the half year convention as it applies to depreciation?

Answer 79

Regardless of when the machine is put in use, you can only deduct half of the calculated annual depreciation in the first year

Question 80

Can an executor make the decision to put property into a QDOT?

Answer 80

YES

Question 81

To accomplish a goal, payments will be smaller if made at the _____ of a period

Answer 81

beginning

Question 82

Assuming inflation, would a serial payment or a level payment be smaller to begin?

Answer 82

SERIAL

Question 83

An annuity due means payments at the _____ of the period, an ordinary annuity is payments at the ____- of the period

Answer 83

annuity due - payments at beginning | ordinary annuity - payments at the end

Question 84

Section 1244 Stock favorable tax treatment is only for ______ and the stock must have been acquired directly from _____; losses are limited to ______ (____ for joint filers); corporation must have received less than _____ at time of issue

Answer 84

1244 - - only for losses - directly from corporation - losses limited to $50,000 treated as ordinary loss ($100k for MFJ) - corp must have received less than $1m at issue

Question 85

For 1202 stock, if held for ____ years, you can exclude ______ of the gain up to greater of ______ or 10x _____

Answer 85

5 year holding period can exclude 100% of gain greater of $10M or 10x ATB (both pertain to one QSBS issuer/holder)

Question 86

Tenancy by entirety and community property are only available to _____

Answer 86

spouses

Question 87

A certificant must notify the CFP board of any conviction of a crime or any professional discipline within ____ of learning of the issue

Answer 87

30 days

Question 88

Is tax exempt income from a private activity bond an AMT adjustment? Are there are exceptions?

Answer 88

YES, unless purchased in 2009 or 2010

Question 89

Are gift tax and gift splitting applicable to resident aliens?

Answer 89

YES - must pay gift tax and can split gifts if married

Question 90

Disclosures regarding the roles, responsibilities, and obligations of the parties in financial planning can be made _______

Answer 90

verbally or in writing

Question 91

If you gift property that is titled JTWROS with your spouse, does that count as a split gift? Do you have to file a gift tax return?

Answer 91

NO - counts as a joint gift, no gift tax return

Question 92

Moderate risk for the CFP exam equates roughly to _____ in equities and ____ in FI

Answer 92

75/25

Question 93

For stock that was subject to NUA, if it is inherited the NUA portion is considered ______ and ______

Answer 93

is considered IRD and DOES NOT receive a step up in basis

Question 94

Anchoring is when you cannot change your point of view based on new information as it opposes your ______

Answer 94

initial valuation/judgement/etc. - you get stuck on your initial evaluation

Question 95

Medicare should be considered as _____ coverage to your employer's coverage

Answer 95

secondary

Question 96

Does Medicare Part B cover dental or vision?

Answer 96

NO - also elective and requires a premium

Question 97

An ESOP must own a minimum of ______ of company stock

Answer 97

30%

Question 98

Are room and board, and uniforms, for a private secondary school considered eligible expenses for a CESA?

Answer 98

YES

Question 99

If you terminate employment and have an outstanding 401(k) loan, the loan is likely repayable immediately, but should your first step be to consult the plan document?

Answer 99

YES