Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

Learned In Practice > Deck 3 > Flashcards

Deck 3 Flashcards

1
Q

Are company provided health insurance premiums deductible to owners of S-Corps or Sole Proprietorships?

A

No

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

What are section 125 rules?

A

Non-discrimination rules for cafeteria plans.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Must COBRA cover an employee who retirees at 65?

Must it cover an employee after death?

A

No—An employee who retires at 65 is eligible for Medicare.

Yes—Cobra must pay final medical expenses after an employee dies.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Are Cafeteria Plans 100% pre-tax (no withholding, no fed and state income)?

Are Cafeteria Plans section 125?

A

Yes, and yes.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Are service discounts between unrelated businesses provided through a reciprocity agreement includable in employee gross income?

A

No, as long as the discount doesn’t exceed 20%

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Can an employer deduct premiums on life insurance when the benefit is over $50,000?

A

Yes. Just because it’s taxable to the employee doesn’t mean the employer can’t deduct it.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

What are the 3 coverage tests for QP’s

What’s the * for DB plans?

A

Safe harbor: % of NHC covered ≥ 70%

Ratio %: % of NHC covered ÷ % HC covered ≥ 70%

Avg benefits Test: Benefit of NHC ÷ Benefit of HC ≥ 70%*

*DB. Plans must also pass the 50/40 test (Cover 50 people or 40%, every day of year)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

What are the three tiers of ADP testing?

A

If NHC defer 0-2%, HC can defer double.

If NHC defer 2-8%, HC can defer 2% more.

If NHC defer > 8%, HC can defer 1.25x as much.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

What’s the difference between a QNEC and a QMC?

What are they both trying to accomplish?

A

A QNEC goes to all employees (Qualified Non-elective Contribution)

A QMC goes to all participating employees (Qualified matching contribution)

Both are solutions for CODAs that fail ADP testing.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

What are the three options for a safe-harbor 401k plan?

What do they all have in common?

A

3% non-elective contribution.

100% match up to 3% + 50% match up to 5 %

100% match up to 4%

All must be 100% vested.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

What is the exemption for a simple trust?

Ie, the amount of income they don’t have to account for on their tax return.

A

$300.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

Are S corp earnings subject to SE tax?

A

No.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

Can you contribute the max amt to a 403b and a 457b in the same year?

A

Yes

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

In calculating college planning cost what are the three steps?

When do you use BEGIN mode?

A
  1. Inflate the tuition to the year the student starts.
  2. Calculate the total amount needed to pay the tuition for the desired # of years
    - Inflation adjusted return
    - BEGIN mode
  3. Calculate the payment needed to get to the amount when the child is ready to go to college.
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

When you make an early withdrawal from a qualified plan in which you have basis, how does it come out?

How is it taxed and penalized?

A
  • % of basis and earnings.
  • Penalty and taxes are only on earnings.
  • Basis has already been taxed.
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

What is an attorney in fact?

A

A person named in a POA document.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

What is a SPRINGING DPOA?

A

One that activates only when the principle becomes incapacitated.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

What does a pour-over provision do?

A

It moves assets into a testamentary trust

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

Can you disclaim part of an asset if you do it within 9 mos and in writing?

A

Yes.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

What are Ademption, Abatement, and In terrorem?

A

Ademption is when you no longer have an asset left to someone in a will.

Abatement is when you no longer have the same amt. of an asset left to someone in a will.

In terrorem is a no contest clause.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

What is a nuncupative will?

A

A dying declaration made in front of 2 witnesses.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

If you want to change a will, is destroying your old one a better idea than making a wholesale change by codicil?

A

Yes, codicils are better used for additional property.

23
Q

What is the random walk hypothesis?

A

The idea that changes in stock prices are independent of each other, and the market cannot be predicted by studying past movements and trends.

24
Q

What filing status can you choose if your spouse dies and you remarry in the same year?

What filing status must your deceased spouse take?

A

MFS or MFJ

Deceased spouse must file MFS.

25
Q

How long must you be abandoned to consider yourself an abandoned spouse and file HOH?

A

5 years

26
Q

Can you file HOH if you maintain an apartment for an elderly parent and pay more than 1/2 their support?

A

Yes.

27
Q

What can you file for the year your spouse dies?

When can you file as qualifying widow?

A

MFJ or MFS

For the 2 years after the year your spouse died.

28
Q

How do you calculate the taxable income of a dependent?

A

Calculate gross income.

Subtract the greater of 1100 or earned income + 350

29
Q

Does your former brother in law pass the relationship test to be a dependent if you’re divorced?

Does your cousin?

A

Yes. For tax purposes, divorce doesn’t end relationships established by marriage.

Cousins do not pass the relationship test.

30
Q

What are the 5 tests for a qualifying relative?

A

Relationship or household, income, support, citizen test for US, Can, or Mex, joint return (they can only file if it’s to claim a refund).

31
Q

Does a stereo purchased for a dependent qualify as support?

Does a car that’s kept in the purchaser’s name?

A

The stereo does, the car does not.

Gas and maintenance qualifies if the dependent is using the car.

32
Q

What is the difference between a SERP (Supplemental Executive Retirement Plan) and an Executive Benefit Plan?

A

SERP’s disregard the $290,000 compensation limit. Both are non-q plans.

33
Q

Are distributions from non-qualified deferred comp plans subject to payroll taxes?

A

No.

34
Q

Which trust distributes income on an annual basis, 2503b or 2503c?

A

2503b.

2503c pays income when child reaches a certain age.

35
Q

Can you make an FLP with just “marketable securities”?

A

Yes, but this type of thing can draw IRS scrutiny.

36
Q

Trick Question Alert:

Does a SCIN buyer pay FMV?

A

No! They pay FMV + the SCIN premium.

37
Q

Does a 2503c need Crummey Powers to qualify for the annual exclusion?

A

No.

38
Q

What is the max. # of homes that can be held in a QPRT?

What is the max. # of QPRT’s an individual can have?

A

1 and 2.

39
Q

What is an estate freeze?

A

Evidently it freezes shares in a privately held company at their current price until they are passed on to heirs.

The point is to avoid CG taxes.

40
Q

Can a 2503 C have a HEMS provision?

A

No.

41
Q

Can an FLP produce personal service income?

A

No.

42
Q

What is a QDOT?

A

A trust to give the marital deduction to a foreign spouse.

43
Q

What’s on the declarations page of an ins. Policy?

A

The name of the insured and the like.

44
Q

Why is reinvestment risk an issue with callable bonds?

A

Callable bonds get called when interest rates go down. Therefore if your bond gets called it’s going to be hard to find a new investment at the same rate.

45
Q

What is the only deemed gift that the owner can control and even take back?

A

529 plans

46
Q

Are 2503c donations present value gifts?

A

Yes

47
Q

Can you split gifts with your spouse in the year they died after their date of death?

A

No

48
Q

What is the value of a gifted bond?

A

NPV of future payments.

49
Q

What is the difference between adding your child to your bank account and adding them to your brokerage account?

A

Adding them to your brokerage account constitutes a completed gift.

50
Q

What is the penalty for withdrawing from a SIMPLE w/in the first 2 years?

A

25%, plus tax.

51
Q

What are the max EE deferral and 50+ catch up for SIMPLEs?

A

13,500 and 3,000

52
Q

Are SIMPLEs qualified plans?

Are withdrawals subject to the 20% withholding that qualified plans are?

A

No and no.

53
Q

Is life insurance owned by a pension plan taxable to the beneficiary?

A

Yes! The insurance policy pays the plan which pays taxable income to the beneficiary.

Learned In Practice (8 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions