General Review - Questions v2 Flashcards
Does a power of attorney survive death?
NO
Is a former spouse considered a skip person for GST?
NO
Will QTIP or reverse QTIP trust assets be included in the gross estate of the surviving spouse at their death?
YES in both cases
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?
Cannot exceed the donee’s net investment income if their net investment income is >= $1,000 (if less than $1,000 then nothing)
What assets don’t receive a stepped-up basis at the time of death?
IRD (installment notes, annuity payments, etc.) and retain their tax characteristics
Tenancy by entirety is only available for _____
married couples
If you gift appreciated property, the donee’s basis is the _____ at the time of gift and their holding period is _______
donee’s basis is the donor’s basis and they also get their carryover holding period
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 ______
basis is the donor’s basis at time of the gift and their holding period is the carryover period from the donor
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 ______
basis is FMV and holding period starts over at the time of the gift
Would a single life annuity in one person’s name be included in their gross estate?
NO - has no further value when that person dies
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?
YES because you maintained a life interest in the property
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?
YES
The “unholy” trinity refers to what?
when three different people on a life insurance policy are the owner, insured, and beneficiary
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?
as a gift made to the third person
You only are allowed to add a portion of gift taxes paid on a gift of _______ property
GAIN GAIN GAIN GAIN GAIN
Can you gift split even if one spouse has no assets of their own to gift?
YES
Is portability of the estate exclusion available to non spouses?
NO - portability only for spouses
Is a bequest in a will subject to gift tax?
NO
Is a transfer to a revocable trust with a remained interest a taxable gift to the remainderman?
NO - not a completed gift
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?
NO - not until the non-contributing party draws on the account for their own benefit
Short term disability generally provides coverage for up to _____, LT disability generally for ______ or until ______
ST - 2 years
LT - 2 or more years and until a certain age (usually 65)
Is a van over 10,000 lbs available to be covered under a PAP?
NO
If you buy a van and use it as a delivery vehicle for your business, can that be covered under your PAP?
NO
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?
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.
If a trust is revocable, who gets taxed on the income?
The grantor
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)
$100 and 10% of AGI
Formula = loss - insurance reimbursement - $100 - 10% of AGI
Are losses allowed for bad business debt?
NO
A target defined benefit plan is a defined _____ plan with ______ accounts
defined contribution plan with individual participant accounts
A forfeitures in a target benefit plan counted toward the annual additions limit?
YES
When exchanging/trading property in like-kind, if the property is primarily held for sale what is the treatment of gain?
must recognize any gain or loss in an exchange held primarily for sale
The grantor of a trust is taxed on income from the trust when the income is used for the ______
grantor’s benefit (which would include an obligation of support)
Ordinary losses result from something other than the sale or exchange of _____ assets
capital
Do you recognize ST or LT losses first? (if you have net losses)
ST
Worthless securities are treated as having become worthless at the end of the year and are treated as ______
long term capital losses
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
Less than $150k MFJ
- 90% current year
- 100% prior year
More than $150k MFJ:
- 110% prior year
For home office expenses, what is the % deduction?
10%
Is an executor required to deposit any cash into an estate checking account as soon as the assets are released to the estate?
YES
Does Tenancy in common avoid probate? Does it avoid tax consequences with unequal contributors?
DOES NOT avoid probate, DOES avoid tax issues with unequal contributors
Does a bequest of a life estate qualify for the marital deduction?
NO
