Night before the exam

Question 1

What is section 2032A about?

Answer 1

special use valuation for estate tax reduction

Question 2

rules to qualify for Sec. 2032A

Answer 2

50% of gross estate must be real and personal property
25% of gross estate real property
real estate must be used for closely held biz,

Question 3

amount of estate tax relief under S 2032A

Answer 3

$750K reduction in decedent’s gross estate. ($1.18mm in 2020)

Question 4

Restriction on S 2032A

Answer 4

5 of 8 rule before death, 10 years after death, decedent and/or his fam

Question 5

What is Section 303?

Answer 5

it’s closely held stock redemption

Question 6

Rules for 303

Answer 6

must be a private corp
stock must be > 35% of gross estate for decedent
stock redeemed is cap gain
cannot exceed sum of taxes plus admin exp

Question 7

What’s Section 6166 about?

Answer 7

installment payment of estate taxes

Question 8

rules on 6166

Answer 8

interest starts day of death
value of bizs must > 35% of adjusted gross estate
up to 14 years. first for interest only
interest rate 2% but not deduct on first 1.57mm
you do get step up on basis, so usually no CG

Question 9

FDIC treatment of joint accounts

Answer 9

pretty sure you get $250,000 per institution on all joint accounts put together! awfully theoretical.

Question 10

what does the constant dividend growth model measure?

Answer 10

value of the stock TODAY based on next year’s dividend

Question 11

How do you value income real estate?

Answer 11

Take NOI/NOL and divide by the cap rate

in an insurance question like the one on pract exam, consider insurance reimbursement a cash flow

Question 12

Where do we find annual imputed interest being part of gross income?

Answer 12

zero coupon bonds

Question 13

APT

Answer 13

arbitrage pricing theory

Question 14

number of factors in pricing theories?

Answer 14

Div discount/CAPM 1

APT mult

Question 15

Limitation on AOC (unexpected)

Answer 15

you can’t get more of a credit than you spent

Question 16

do both spouses need to file a 709 with a $150K 529 gifting strategy?

Answer 16

yes

Question 17

Can you have Medicare as secondary coverage?

Answer 17

yes, beginning age 65

Question 18

DEF: split-dollar life insurance plan

Answer 18

premium and death-benefit sharing arragment between ER and EE, common with key execs not to rank & file

Question 19

does HO-6 cover roof of condo?

Answer 19

no, the building’s policy does, silly!

Question 20

fraud on insurance, even on death

Answer 20

policy can definitely be rescinded

Question 21

what about foster children, adopted, court ordered guaradian, stuff like that?

Answer 21

exactly like family

Question 22

NII against calculation

Answer 22

STCG, LTCG, child’s int (if on his return), royalties and ord dividends

Question 23

wash sale

Answer 23

count 31st day following carefully

Question 24

paying estimate tax 90/100/110. 150k AGI last year.

Answer 24

it’s 100% of last years or lesser of 90 of this year or 110% of last year. weird.

Question 25

NQDC plan structure?

Answer 25

DC or DB

Question 26

Late: what does a GRAT do?

Answer 26

it pays an annuity to a grantor and then the trust goes buh-bye at his death

Question 27

pay CLOSE attention to:

Answer 27

age, payouts, refundability, limits, where do assets go at death, etc, who’s the client