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CGT > PSA 1 > Flashcards

PSA 1 Flashcards

1
Q

Medicare A Skilled Nursing benefit

A

Benefit lasts first 100 days

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2
Q

HO-2

Policy payment with appreciation, depreciation, coinsurance

A

Actually coverd / (Should have covered * Coins) * damage – Deductible

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3
Q

CESA

Contrib tax deductible?

A

No. The benefit is earnings are not taxed

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4
Q

Limit on losses due to RE (active part)

A

Can deduct up to $25,000 against active and portfolio income

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5
Q

Qualified plan offering

  • Simplicity
  • Integration with Social Security
  • Flexible funding
  • Ability to invest primarily in company stock
  • In-service withdrawals
  • Distribution of benefits in cash if desired
  • Deductible employer contributions
A

Profit sharing plan and

Stock bonus plan

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6
Q

Are CLATs revocable?

A

No

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7
Q

COBRA divorce lasts how long?

A

36 months

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8
Q

Ratio Percentage Test

A

NHCE % / HCE % covered

>= 70%

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9
Q

Average Benefits Test

A

NHCE / HCE avg. ben

>= 70%

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10
Q

Gift amount of appreciated assets

(FMV > adjBasis)

A

Carryover basis (incl. donee’s gift tax, if any)

Carryover holding period

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11
Q

Income tax treatment of involuntary conversion of real property

A

1033 allows deferal of gain

  • If received prop > FMV, gain not recognized
  • If the amount reinvested in replacement property is less than the amount realized, the realized gain is recognized to the extent of proceeds not reinvested.
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12
Q

Nonrecognition treatment

A

If converting to money, Elective

If replacement property, Mandatory

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13
Q

FDIC Insured Amount

One person, multiple accounts/instruments

A

Max $250/depositor/institution/category

  • Single
    • savings accounts, CDs, NOW accounts, checking accounts, and money market deposit accounts
  • Joint
    • All co-owners must be natural persons. Legal entities such as corpora-tions or partnerships are not eligible for joint account deposit insurance coverage.
    • Each co-owner must have a right of withdrawal on the same basis as the other co-owne
  • Trust accounts
  • Retirement accounts invested in bank investment products
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14
Q

Alimony and Child Support

Incl in AGI?

A

Alimony

Not Child Support

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15
Q

Which is included in AMTI?

  • Excess of depletion deduction over the adjusted basis
  • Excess of fair market value above the exercise price if exercised for freely transferable ISOs
A

Yes, both

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16
Q

SEP rules: Loans?

A

No

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17
Q

Basis deduction election

A

up to 50% AGI

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18
Q

Do private annuity payments consist of consist of a partial return of basis, capital gain, and ordinary income

A

Yes

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19
Q

Taxation of Group Term Life as ER Benefit

A

Premiums up to the first $50,000 of face value paid by ER are tax exempt for EE.

For any amount of group term life insurance coverage greater than $50,000, the scheduled premium per $1,000 per the Uniform Premium Table is included in the employee’s W-2 income

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20
Q

Payment on Homeowner’s claim

A

Coverage / (Should have covered * coinsurance)

– Deductible

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21
Q

COBRA 18 v 36

A

18: Vol. or invol. termination
36: Death, divorce, legal separation

(neither list is nec. exhaustive)

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22
Q

Required account value for margin account

A

Loan amount + MVcurrent * Maint %, where

Loan amount = (1 - initial margin%) * MVinitial

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23
Q

Medicaid look-back period for assets transferred < FMV

A

60 months

If a transfer was made within the look-back period, the individual will be ineligible for benefits for the length of time equal to the amount transferred divided by the average monthly cost of nursing home care for the region (i.e., if the asset transferred is worth $10,000 and the monthly regional cost is $1,000, the individual will be ineligible for 10 months)

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24
Q

Do ISOs or NQSOs create AMT adjustment upon exercise?

A

ISO: Yes

NQSO: No

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25
Q

What type(s) of plans does PBGC cover?

A

Only DB (incl. Cash Balance)

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26
Q

How does Life Ins. proceed change if age misrep?

A

Beneficiary will only receive the amount of death benefit that the annual premium would have purchased at her actual age

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27
Q

Are gifts and child support incl. in AGI?

A

NO

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28
Q

Are these included in AGI?

Cash div

Lottery prize

Earnings

Alimony

LTCL

A

Yes

LTCL deducted up to $3,000

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29
Q

Which step most urgent to reduce Gross Estate?

  1. Add daughter to brokerage acct. JTWROS
  2. Transfer life ins. on self to daughter
  3. Transf. residence to an irrev. living trust
  4. Gift residence to daughter
A

Transfering life ins. will be removed from GE if survives 3 years

3-year rule does not apply to trust or gift

Brokerage acct. would not work becaus decedent supplied 100%

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30
Q

Charitable deduction

Basis election v FMV

A

Basis: up to 50% AGI

FMV: up to 30% AGI

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31
Q

Holding period requirement to excl. gain from TI

S 1202 stock

A

5 years

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32
Q

Do sales of vacation homes qualify for S 121 gain exclusion?

A

No!

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33
Q

Does a profit sharing plan require a J&S annuity

A

No

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34
Q

Tax treatment of interest on Treasuries

A

Exempt from state tax!

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35
Q

May private annuities be secured by collateral?

A

No

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36
Q

May you transfer from Trad IRA to HSA?

A

One time, up to the HSA limit

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37
Q

Gift of loss property

A

Basis for gain: Donor’s adj. basis (no gift tax!)

Basis for loss: FMV

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38
Q

May a recipient of a SCIN require security as collateral?

A

Yes

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39
Q

What does a SCIN need to be effective?

A

A risk premium to reflect risk of cancellation

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40
Q

At seller’s death, what happens to PV of SCIN balance?

A

Excluded from Gross Estate

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41
Q

Alternate valuation date

Two exceptions

A
  1. Residence sold prior to AVD
  2. Wasting assets, such as patents, annuities, and installment notes, which are valued at DOD
42
Q

Which is included in AMTI?

  • Net appreciation on long-term capital gain property donated to a public charity.
A

No

43
Q

SEP rules: Mandatory ER contrib?

A

No

44
Q

Which does the Fed control?

Prime rate

Fed Funds

Discount rate

A

Discount rate

45
Q

Max CFP suspension period

A

5 years

46
Q

Can CFP Board punishment be

Additional CFP continuing ed credits

A

Evidently

47
Q

Cliff vesting permitted in 401(k)

A

3-year

48
Q

Difference between

Government Pension Offset and

Windfall Elimination Provision

A

W is for Worker. Based on own comp history

GPO is for spousal AND survivor benefits

49
Q

Do SEPs permit life insurance?

A

No

50
Q

Max total contribution to SIMPLE IRA

A

EE Annual limit $13,500 +

2% * min(Comp, limit 285,000)

51
Q

SIMPLE vesting of ER contrib

A

Immediate

52
Q

Money purchase plan

Adjusted contribution percentage

A

20%

Applies only to self employed, not to their employees

53
Q

Indexed Annuity

Floor, Cap rate, Participation rate

A
54
Q

Taxation on loans from MECs

A

LIFO

Ord. income tax on Gain

10% early penalty if < 59-1/2

55
Q

How long does Short-Term Dis. Ins. cover?

A

Up to 2 years

56
Q

How long does Long-Term Dis. cover?

A

Typ. from 2 years to a spec. age, typ. 65

57
Q

LTC: Chronically ill

A

Unable to perform 2 of 6:

Eat

Bathe

Dress

Transfer bed to chair

Toilet

Continence

58
Q

ISO AdjBasis

A

Grant price

59
Q

ISO exercise AMT adjustment

A

Bargain element is Positive Adjustment

60
Q

What is an HO-8 policy for?

A

Older Victorian homes

whose replacement value greatly exceeds current value

61
Q

NQSO Cashless Excercise

A
  1. Zshares * X = Ord. Income
    1. Need to sell Y shares to cover cost
    2. = Ord. Income * (1+marg)
    3. Y = S / {Ord. Income * (1+marg)}
  2. Receive Z – Y shares
62
Q

May LTC be paid for by FSA?

A

No!

63
Q

Income taxes on Split-dollar Life Ins Death Benefits

A

Zero!

64
Q

Nonqualified annuity principal/earnings basis

A

LIFO if not over life expectancy

65
Q

Medicare Part A premium?

A

Not if person or spouse has 40+ Medicare credits

66
Q

Like-kind exchange

When property was for sale

A

Like-kind rule don’t apply!

Especially to RE dealers

67
Q

Carryover basis for a gift on which no gift tax was paid

A

Grantor’s adjBasis (original cost less depreciation)

unless FMV is lower on date of gift

68
Q

IRS six-year statute of limitations applies

A

If taxpayer omits an amount in excess of 25% of gross income

69
Q

Combined failure to file and failure to pay penalty

A

Two are netted against each other

File: 5%/month

Pay: 1/2%/month

Max 5%/month

Max 25%

70
Q

How much passive loss is allowed?

A

If disposed, all of it

If kept, netted -> prorata

71
Q

excess net passive income tax applies to

A

S corps

72
Q

Tax rate on CGs from collectibles

A

28%

73
Q

Tax rate on CGs from commercial prop

A

25%

74
Q

Is Section 2503(b) trust is a simple or complex trust?

A

Simple, becauses all income must be distributed annually

75
Q

Can a non-citizen become one in order to qualify for marital deduction?

A

Evidently

76
Q

May the executor elect to pass estate into a QDOT?

A

Evidently

77
Q

Benefit of gifting insurance over land or cash

A

Adjusted taxable gift (if survives 3+ years) may be lower = Cash value at time of gift

78
Q

Stock redemption buy-sell agreement

A

Corp is owner, pays premiums, is ben.

79
Q

Why won’t putting house into irrev trust qualify for Medicaid?

A

60 month

Look-back period

80
Q

Is transfer to a GSTT trust a direct skip?

A

Yes

81
Q

GSTT Annual Exclusion

A

Lifetime exclusion allowed for lifetime skip transfers

82
Q

Is QPRT eligible for annual gift tax exclusion?

A

No! Remainder interest, not present interest

83
Q

QPRT qualify for Ch. 14 Zero Valuation Rules?

A

No, because grantor continues to reside

84
Q

Private annuity: Secured by collateral?

A

No

85
Q

Does a life estate coupled with a limited power of appointment qualify for the marital deduction?

A

No, because it is a terminable interest

86
Q

Is a corporate recap a substitute for buy/sell agreements?

A

No, it is a generation transfer method

87
Q

Does GE include irrev. trust?

A

No!

88
Q

Difference between

Qualified disclaimer and

Election against the will

A

QD: made by heir

EAW: Made by disgruntled spouse

89
Q

Gift recipient’s basis

when gift tax was paid

A

Grantor’s adj. basis +

Grantor’s gain / FMV * Gift tax paid

90
Q

What is wrong with a grandparent-owned 529?

A

Although excluded from assets for FAFSA, while the child is attending college reduce future financial aid determinations by 50% two years after distribution

91
Q

May a trust w/ spendthrift clause serve for educ.?

A

Yes

92
Q

Disadv. of UTMA for educ

A
  1. Assets are included at the higher student rate when determining EFC
  2. Earnings within the account may be taxed at the parent’s marginal tax rate
  3. Account ownership automatically transfers to the child when the age of majority is attained
  4. Funds in the account are not portable and are unable to transfer to a different beneficiary
93
Q

Whose asset is an UGMA?

A

Child’s

94
Q

Is UGMA income tax-free?

A

No

95
Q

How long receive SS Disability to qual. Medicare?

A

24 months

96
Q

COBRA after term. gross misconduct

A

None for EE

None for childre

97
Q

Coverage C ins on residence at another location

A

50%

Prop at that location: 10% cov, or 5%

98
Q

Limit on collecting when contributory negligence

A

$0!?

99
Q

Max salary deduction for Dependent Care FSA

A

$5,000

100
Q

Form ADV

Part 2A

A

Prior to or at time of contract,

Must provide or

Must provide information on

CGT (6 decks)

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