Gift tax implications (general power): 1. under what circumstances is it taxed? 2. what if it lapses with a 5 or 5 power?

1. exercised, released, lapsed 2. not taxed

Estate tax implications (general power) 1. what is it taxed? 2. what if is lapses, released, or exercised with a 5 or 5 power?

Estate tax implications (general power) 1. what is it taxed? 2. what if is lapses, released, or exercised with a 5 or 5 power? A 1. exercised, released, lapsed 2. greater of the 5 or 5 is taxed

Home Stretch- Frequently Missed (Big + Variety) (11/6) Flashcards by Carly Jeavons

Are in service withdrawals permitted from a profit sharing plan?

Yes, after 2 years if plan document allows

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Are 401K deferrals subject to FICA and FUTA

yes

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What are the three main plan types that cannot integrate with ss?

esop
simple
401K simple

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What are SEP IRA contribution limits?

25% (not 100%) of compensation or $58,000

* If taking the 58,000 is more than 25% of the pay, your have to do the lesser. so you’d have to do the 25% of pay

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RETIREMENT: Are in service withdrawals permitted from a pension plan?

Pension plans may permit distributions to current employees who have attained age 59.

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What is the salary cap for a simple IRA plan

NONE- but it DOES apply to 401k simple

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Are SIMPLE IRA deferrals subject to FICA and FUTA

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What are the main ways a trust would be tainted for INCOME TAX PURPOSES?

trust income used to pay premiums on grantor or their spouse
they have a reversionary interest that’s more than 5% of value at the time of creation
grantor or their spouse has power to decide anything about the trust or principal and how it’s used

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Is a gift to a trust in which income will be accumulated for a period of years a completed gift?

Yes- but it is a gift of future interest.

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Are taxable gifts subject to probate

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Gift tax implications (general power):

under what circumstances is it taxed?
what if it lapses with a 5 or 5 power?

exercised, released, lapsed

2. not taxed

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What are the requirements for a section 303 stock redemption?

must be a regular or S corp (closely held)
value must be more than 35% of estate
only an amount of stock equal to a total of all estate taxes and admin expenses can be redeemed

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When is a 709 required when spouses gift from a JTWROS or comm prop account?

If the gift is over 30k

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If question says the property owner wants to gift away the property what are their options

Partnership S corp (gifting shares)

FLP (gift interests to limited partners to reduce estate)

Gift leaseback (gift of FULLY depreciated property)

QPRT- an irrevocable transfer of a personal residence

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slang for QTIP trust? and what is the key word to remember characteristics?

current income trust
LAME
lifetime annual income for spouse
annual payments
mandatory payments
exclusively for spouse

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When do you NOT to a gift leaseback?

When child is under 24

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Is a gift to a disclaimer trust a completed gift?

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Completed gifts, except certain life insurance transfers and gift taxes paid are never included in the gross estate. There is no 3 year rule with them. t/f

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Diane was an income beneficiary of a trust set up by her father. She was given a 5 or 5 power. At the time of Diane’s death, the trust was worth $100,000, and she had exercised her 5 or 5 right this year. What amount of the trust is included in Diane’s gross estate?

$0
$5,000
$10,000
$100,000

The question asked what amount of the trust is included. Nothing is included because she exercised her 5 or 5 right.

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What are the three situations in which life insurance would be included in the decedents estate?

proceeds are paid to the executor of the decedent’s estate
There was an incident of ownership at death
The INSURED transferred a policy with an incident of ownership within 3 years of death (not sold)

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Which of the ABC trusts are subject to estate taxes?

A C

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Estate tax implications (general power)

what is it taxed?
what if is lapses, released, or exercised with a 5 or 5 power?

Estate tax implications (general power)

what is it taxed?
what if is lapses, released, or exercised with a 5 or 5 power?

exercised, released, lapsed
greater of the 5 or 5 is taxed

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What are the requirements to file as a widow

must remain unmarried

- maintains a home for a child

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Can self employed person that pays 100% of meal expenses deduct the cost?

yes- 50%

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Can a SALARIED employee who is not reimbursed for entertainment expenses deduct the remaining expense on schedule a?

What does partnership (AND LLC) basis include that s corp basis doesn't?

bank loans

short term gains and 1245 recaptures are subject to what rates?

ORDINARY

Can losses from a PTP be used to offset passive income from other sources?

Net losses from a PTP may what?

carried forward used only to offset against future income from SAME partnership the loss in the top PTP cannot escape the circle carried forward until used against income in that same partnership or sold

Can PTP (public limited part) income offset PALs (passive activity losses)?

What DOES offset PALS?

PIGS | passive income generator

COULD s corp income be passive income if the person owns 30% but doesn't materially participate?

yes it could

How does the low income housing credit work?

It's allows annually over a ten year credit period | depreciation is over 27.5 years

defer tips income?

stock needs to be purchased BEFORE WHEN to get div

before ex dividend date | or two business days before record date

etfs- close ended?

they can be

Treasuries = subject to what tax

state and local only

What is the term of the EE bond?

20 years

Taxation for call writer- less than 9 month option- lapses

gain is short term gain

Coefficient of variation measures what? | What does it indicate?

relative variability | risk per unit of expected return

Taxation for call holder- less than 9 month option- they exercise

option is considered sold (expired) and is a ST gain or loss (uncommon)

Taxation for call writer- less than 9 month option- option is exercised

gain is added to the sale price and it can be either short or long term

Taxation for call writer- less than 9 month option- at time of purchase?

nondeductible cap expenditure

max contribution for MPP annually an employee can receive

lesser of 100% of salary or $58,000

How much is the Child Tax Credit refundable up to?

1400

All corps that are not C corps (basically CONDUITS) qualify for QBI deduction- up to $______ threshold for SINGLE (QBI taken after AGI is calculated- only service related business qualify)

164k

salary cap for ALL types of qualified plans

2900000

Regarding early SS penalties while working, if you are younger than FRA during all of 2021, the gov must deduct $__ for your bene for every $__ you earn above _____. If the reach FRA during 2021 the gov will deduct $___ from your benefits for each $___ you earn above ______ until the month you reach FRA.

$1 -- $2 --- $18,960 | $1 -- $3 ---- $50,520

85% ss taxation at incomes of what level

$34k (single) | $44k (married)

How much is the AOTC refundable up to?

Compensation over this = highly compensated employee (if not over 5% owner)

130k

50% ss taxation at incomes of what level

$25k (single) | $34k (married)

The amount of educational expense support provided by an employer that can be excluded from income

5250

FHA mortgage maximum amount (for low and middle income families)

270000-730000

Simple IRA salary cap

450,000

What is the amount of the earned income credit?

6728 (refundable)

- Over ___% owner is a HCE even if making under $130,000

penalty for fraud

- For private foundations: ____ % excise tax on net investment income (not for "supporting organizations" though --> adv. for these)

- QBI tax deduction for single member LLC if taxable income is less than $164,900

- AGI deduction for charitable CASH donation to public (Covid- 2021)

100

- The % of discretionary income used in income contingent student loan repayment plan

- The "accumulated earnings tax" that PSCs with earnings over $150,000 are subject to

deduction for cash contribution to DAF for 2021

100- was 60 (changed with cares)

- The % of discretionary income used in income based repayment plan calculation

- ERISA plans may not hold employer securities if the total FMV of such assets exceeds ____% of the plan's portfolio at the time

- The penalty for private foundations if they don't distribute ____ % of the FMV of it's assets

___% of the gross estate must consist of real property for 2032A valuation

More than $100,000 of ISOs may be granted to an employee at a time as long as no more than $100,000 of ISOs (based on the FMV of the underlying stock as of the grant date) vest in a given year. As long as they exercise price is at least ____% of the FMV of the stock at grant date and the options vest within __ years, a greater-than-___% shareholder may be granted ISOs.

110 5 10%

- Depreciation recapture for 1250 property (for highest tax bracket)

- Tax penalty for negligence

- ___% of gross estate for 2032A valuation to apply

- In service withdrawal after ____ years of participation (profit sharing)

2 years

in life insurance how long is the incontestable period? (A provision they can have)

2 years

- Amount of days a rental property can be rented for and not be counted as mixed use property (i.e. rental income becomes taxable)

< 15 days per year

In regards to a complaint against a certificant, all answers to complaints shall be submitted within ____ calendar days from the date of service of the complaint on the certificant.

Amount of years required that either the decedent of a member of the decedent's family must have materially participated in the operation of the farm or business PRIOR TO DEATH that would allow real property to qualify to special use valuation (2032A). 10 years if talking about after death

5 out of 8 years

When is the ex dividend date?

The date of record for the corporation is the first business dat after the ex dividend date. To be listed on the corporations books as a holder the investor must purchase its stock before the ex dividend date.

- a DC plan that holds publicly traded employer securities must allow participants to diversify employer contributions after ____ of service

3 years

- Amount of time I and EE bonds earn interest up to

3 years

Amount of time a widow can claim the $500,000 section 121 exemption following the spouses death

2 years

- Gifts made within last ___ years not included in gross estate, but added back to TE

3 years

- If someone over 21 works this much, an employee needs to be enrolled in a SEP

3 out of 5 years

- If sale date of stock option is more than ___ year from the date of exercise, all gain is long term capital gains. If ISO is solder before ____ from exercise, it results in a disqualifying disposition

1 year

If qualifying ISA is sold before this--> FMV- Exercise = ordinary income & ded. by corporation - Another way to say that: If sale date of stock option is more than ____ from the grant date, it results in a disqualifying disposition

2 years

The date that FSA money that must be spent by or else it is forfeited (this includes grace period amendment) - ONLY HEALTH FSA gets this- NOT dependent care

March 15th

The amount of time to look at to see if an employee can participate in a SIMPLE. Earned over $5,000 in any of them & is expected to earn more than that this year? - Eligible

previous 2 years

Emergency fund ratio (EFR) =

Emergency fund ratio (EFR) = liquid assets ÷ nondiscretionary monthly expenses

Coefficient of variation (given SDs and average returns of 3 stocks, lowest COV with be least risky)

For each stock, multiply the standard deviation (0.02) time the average return (0.13)

To get R2 when you don't have it

square the correlation coefficient

Book value

Accounting value of common stock outstanding + capital in excess of par + retained earnings

To figure out how much of a husband's WHOLE LIFE policy WHERE HIS WIFE IS THE INSURED is included in his estate if he dies

Whole life- it's the terminal reserve plus the unearned premium. What? What? Those are premium payments remaining for the year that haven't been paid + the cash value of what it would have been at that point where the premiums end. (that sum is called the replacement value I think)

plan with 2-6 year graded vesting schedule-- 7.5% money purchase plan (this is the ER contribution amount) -- Worked for 5 full years. "What amount of her account balance is vested?"

Look at ER contributions for each year. Ignore year one. Add ER contributions for years 2, 3, 4, and 5. If salary for these years is given, just multiply 7.5% x salary to get the match amount. At the end of year 5 she'd be 80% vested. (end of year 2- 20%, EOY 3- 40%, EOY 4- 60%, EOY 5- 80%) Multiply 80% times the total contribution amount and that's her vested amount.

To calculate geometric mean return

1. Add 1 to the returns (25% becomes 1.25) - compare it to the year before- not the original number 2. Multiply all those returns together --> That becomes FV 3. PV = -1 (always) 4. n= number of years of investment 5. solve for i!

Amount of excess disparity allowed for defined contribution plans that integrate with social security

Base % + permitted disparity = excess % base % = DC plan contribution for compensation below integration level permitted disparity= lesser of base % or 5.7% Excess %- DC plan contribution for compensation above integration level

Amount of installment sale included in gross estate of decedent

The FMV of the PV of all remaining payments

Income tax deduction amount a donor gets for transferring assets to a charitable remainder trust (CRUT/CRAT)

The FMV of assets transferred less the value of the income interest (basically, the PV of the annuity payments the donor will be getting)

Calculation of deductible casualty loss

Calculation of deductible casualty loss FMV or basis (whichever is lower) - insurance coverage - $100 - 10% of AGI (if presidentially declared disaster)

Calculation for replacement cost coverage

Replacement cost x coinsurance % = insurance required insurance required / insurance carried x loss - deductible = amount paid by insurance another way to say: (insurance coverage had) _______________. X loss - ded Replacement cost x coinsurance %

Taxes an individual will pay if they take a settlement offer for a life policy

To calculate the gain (to be multiplied by cap gains rate) --> proceeds - basis Don't pay attention to cash value

Taxable ordinary income at surrender of life insurance policy

Net Cash Value (net of loan) + Loan (add back) - premiums paid (amount billed- divs used to pay premium)

Deductible amount for a pooled income fund

Charity gets whatever is left over in the fund after distributions. Income tax deduction on the present value of what the charity will get (remainder interest) Gift tax deduction on this too!!!