Module 4: Division of Property and Related Tax Issues Flashcards
Mary assigns an annuity contract to Greg, pursuant to the terms of their divorce. Tax on the annuity contract is to be paid by:
Greg when the annuity is paid out
Sherri has a tax-deferred annuity that will be transferred to John, her ex-husband, per the divorce decree. How is the transfer taxed and who will have to pay the tax?
John will pay ordinary income tax when he takes a distribution.
Which schedule on a tax return will NOT help the CDFA professional find hidden assets?
Schedule H is used for household employment taxes.
To discover hidden assets, a CDFA professional should review tax returns going back how many years?
It is recommended that one look at tax returns for the past five years because there may be assets that an individual is not aware of.
Lee purchased a parcel of land before he got married. Years later, he transferred the land to his wife, Andrea, to satisfy property division requirements during their divorce. The basis of the property is:
A carryover basis on the date of the transfer.
A transfer pursuant to a divorce gets the same basis as the transferor.
Marital property is best defined as which of the following?
It is earned during the marriage.
Marital property is everything earned during the marriage even if it is kept in one spouse’s name.
Which Internal Revenue Code sections permits spouses or former spouses to transfer property tax-free?
IRC §1041
Which of the following is true about community property status?
Property cannot be purged of its community property status.
Which state is essentially a community property state, but has exceptions to the typical community property rules?
Wisconsin is essentially a community property state, but there are exceptions to the typical community property rules.
How are assets split in a divorce in a Community Property state?
Community property states generally require an equal split of assets.
