Case Studies and Quiz Review Flashcards
Is a UTMA considered part of the marital estate?
No
For the HOH tax filing, who gets exemptions?
You and your children
How is spousal support / alimony modified?
By going to court - in contrast, child support is always modifiable
How long does an ex-spouse need to be divorced before they’re eligible for spousal retirement benefits?
Assumign they’re 62+, must be divorced by 2+ years
For widows who get remarried, at what age are you no longer disqualified from your ex-spouses’s spousal benefit?
Remarraige after age 60 doesn’t DQ widow from collecting on ex-spouses’s benefit. Also, if divorced from pre-60 marriage, can re-qualify.
Are alimony and child support listed as a living expense within the Financial Affidavit?
No! Neither are included as living expenses
What is excluded from the list of “Career assets”
A company car, specifically, because it’s no longer a factor if they don’t work there anymore.
How often can you use the Section 121 exclusion for capital gains on home sale?
Every 2 years
Does a judge consider a spouse’s family assets (parents) when crafting spousal support or maintenance?
NO
Formula for inflation adjusted interest rate?
(1+interest rate / 1+inflation rate)-1*10
When using life expectancy tables, do you use the life expectancy factor based on today’s age, or the age of the pension recipient when the pension can begin?
For life expectancy, always use TODAY (or the date of the calculation)
What are some issues with property settlement notes?
If not collateralized, often by a QDRO, they go away with bankrupcy. Also, interest paid on the note is deductible by the payor.
Is fault considered in alimony proceedings?
No - fault is not part of the equation
What is “reserved jurisdiction” when dividing pension assets?
Essentially, this means the court will decide at a later date - generally a bad idea, leaves uncertainty and open ends.
IN addition to tax returns, what’s most important to review for tax information in an engagement?
1099 and W2 because it shows deduction information, and other connected items.
True or false - A QDRO is needed to split a medical savings account?
False - the administrator would need a divorce decree typically
What’s a 72(t)(2)(C)?
One time 401(k) distribution with a QDRO, no 10% penalty (but 20% withholding) - as long as it happens before the rollover happens to the nonparticipant name
Which tax credit is refundable?
- Earned Income tax credit
- Child and dependent care expenses
- Regular child tax credit
- Retirement savings contribution credit
Only EITC is deductible - the rest are not.
Which does NOT have a rule for allocation between spouses?
- AMT Credit
- Capital losses
- Charitable Contributions
- NOL
Only AMT Credit doesn’t have a rule to allocate between spouses. The rest can be allocated.
What’s the expiration of the window to apply for the “innocent Spouse” rule
2 years for relief application after collection activities have begun
What is the only loss carryforward that affects the basis of an asset upon transfer in a divorce?
The Passive Activity Loss carry forward
For the childcare expense credit, who can use the credit, and for what portion of expenses?
Only the custodial parent can claim, and only for their share of childcare expenses. The non-custodial parent can’t claim any part of their expenses.
Is Child Support ever taxable?
No
Difference between Chapter 7 and Chapter 13 Bankrupcy?
Chapter 7 is selling all assets and paying debt, Chapter 13 is a 3 year payment plan, and you can retain some collateral/assets.
Which act created taxable Spousal Support?
Revenue Act of 1942
Who pays depreciation recapture in an asset transfered incident to divorce?
The person receiving the asset (different from normal)
Which tax credit can non-custodial parent qualfiy for?
Only Child Tax Credit can be used by non-custodial parent.
Which section governs the Earned Income tax Credit
IRS Section 32
For pre-2019 divorces, what’s required for deductiblity?
Court order
Cash, check, money order (no services)
Couple can’t agree otherwise
Can’t reside in same household
Terminate at payor’s death
No JNT tax return
No portion considered child support
What tax benefit can be transferred to the non-custodial parent, by agreement?
Dependency Exemption!
The Child Tax Credit can also be claimed, but only if non-custodial parent meets the requirements
What’s the relationship between child support and alimony?
Inverse - as alimony goes up, child support goes down.
Is a loss on a real estate sale deductible after the divorce is final?
No - you can’t deduct it
What are exceptions to Section 121 exclusion 2-year rule
UNforseen circumstance, Health issues, employment change. NOT a new baby.
What are special rules for Section 121 qualification, and specifically for divorces
- ONly every 2 years (exceptions apply for unforseen stuff)
- Must own and use 2/5 prior years
For Divorces:
- If one spouse moves out but retains interest, considered as “use” for qualification under 121
- Same for ownership period and use period, even if you get remarried.
