Chapter 4

Question 1

Common Law

Answer 1

Equatable distribution (41 states)
50/50 is norm but not required
Equitable does not mean equal

Question 2

Community Property

Answer 2

All Property acquired during marriage is split 50/50

Assets or Income

Question 3

HSA/MSA

Transfer

Answer 3

Not considered a taxable event

After transfer the interest is treated as the spouses HSA/MSA

Question 4

Purpose of IRC SEC 1041

Answer 4

Avoid capital gain to the transferor spouse

Question 5

IRC SEC 1041

Answer 5

A transfer incident to divorce if it is made within 1 year after marriage terminates OR is related to the marriage termination

Question 6

Separate Property

Answer 6

Property brought into the marriage

AND

Kept Separate

Question 7

Temporary Order

Answer 7

May be used to limit the amount that can be spent by the dependent spouse

Question 8

SEC 1041 DOES NOT APPLY TO

Answer 8

Taxpayers spouse or former spouse is a nonresident alien

Certain transfers in trust or certain stock redemptions

Question 9

Common Law Marriage

Answer 9

Act like they are married
Hold themselves out to the world as married
Intend to be married

Question 10

Closely Held Business Valuation

Questions to Ask

Answer 10

Was the business established before or after the marriage
Did it grow substantially during the marriage
If it did grow was the ex spouse a stay at home?
Was separate property from either spouse invested in the business
Was it a joint business run by both spouses

Question 11

Fair Market Value

Answer 11

What a willing buyer and seller can agree upon as a final price…in cash

Question 12

Capitalized Earnings

Answer 12

When a business has limited assets but constant cash flow

Professional practice

Question 13

Goodwill

Answer 13

The increase in earnings or value brought about through repeat business

Question 14

Stock Options

Answer 14

In most states stk options granted to a spouse wile married become part of the marital property

Stock options are considered to be additional forms of compensation

Viewed as deferred compensation tied to a future value of the stock

Question 15

Defined Benefit Plan

Answer 15

The employer promises a retirement benefit or pension to the employee when the employee spouse reaches retirement age

Question 16

403(b) Catch Up Rules

Answer 16

With employee for 15 years

Additional $3,000 for up to 5 years

Question 17

ROTH IRA Distribution Rules

Answer 17

Had the Roth IRA for 5 years
59 1/2
Qualified 1st time homebuyer

Question 18

457 Plan

Answer 18

NQ Plan for Government Employees

Catch up provision…yes

Double contribution for 3 years?

Question 19

Social Security…Marital Property?

Answer 19

Generally not considered marital property

Question 20

QDRO

Answer 20

Qualified Domestic Relations Order

Court order on payments to alternate payee

Question 21

What a QDRO CANNOT Do

Answer 21

Require the payment of benefits to an alternate payee if those benefits are already payable to another alternate payee

Specify who will be responsible for payment of taxes

Question 22

Wait and See

Answer 22

The pension assets are on hold until a future date and then are split at the date of retirement

Question 23

Reserved Jurisdiction Method

Answer 23

Asks the court to wait and delay until a later date before valuing and dividing the pension because there are too many unknown variables at this time thus making an accurate current valuation unlikely.

Question 24

Spousal Support IRC Code

Answer 24

IRC Sec 71(b)

Alimony

Question 25

Deductibility of Spousal Support

Answer 25

Support is deductible by the payer and must be included in the spouse’s or ex spouse’s income