Quiz 3 Flashcards
If a family has more than one child in college in same year, can they apply for multiple AOCs?
yes. $2500 for first four years of college
is there an age limit for the Lifetime Learning Credit?
no
What’s the Lifetime Learning Credit maximum per year?
$2,000
How long after close of fiscal year do federal covered advisers have to update their ADV forms?
90 days (fed)
How often can you elect the Section 121 exclusion?
no more than every 2 years
What happens to a gift of cash to an irrevocable living trust?
it’s removed from the gross estate for federal estate tax purposes
What is the deductibility of a loss from a non-publicly traded partnership?
none, as a loss. it’s a passive loss. Can only take it when the partnership is sold or at holder’s death.
What’s a 125 plan?
FSA
What triggers transfer for value rules?
selling a policy to anyone but the insured
Are K-1s and schedule C income considered earned?
no
Recapture of 72(t): what do you have to pay?
10% of total payments received before age 59-1/2 and interest.
For spousal or deductible IRA purposes, does it matter if the plan you’re an active participant in is qualified or not?
no it doesn’t.
PIA
primary insurance amount
FRA
full retirement age
Reducing benefits formula
months before FRA, reduced $1 for every $2, 18240
during fra year, 1 for ever 3 over 48000
QHEE
qualified higher education expense
QTP
qualified tuition program
Two types of 529s
- College savings
2. Prepaid tuition
Keys: College savings (8)
- invested, risk tolerance, market based perf
- parents/grandparents’ asset
- open enrollment
- includes grad
- not just tuition & fees
- out of state ok
- not state guaranteed
- refunds (huh?) return inv, but earnings 10%penalty (prob if not used for educ0
Keys: Prepaid tuition (8)
- tracks tuition infl, risk averse
- parent/grandparent asset
- could be just underg4ad
- tuition & fees only
- in state may be better
- not necc state guaranteed
- choice of school impacts inv return
- refunds no penalty
Particular of the $75K gifting limit
an individual can gift 5 years in advance. that uses up the gift exclusion for gifts to the bennie of the 529 for 5 years. if you go over that within 5 years — gift tax
Can couples each do the $75k to 529?
heck yeah
Can couples go over 75k or 300k to gift to multiple children?
yes. $75,000 per person per gift. gift splitting. multiple children. in book example up to 600k, more.
How many times can you do a 529 rollover in 1 year?
once. not that anyone would do more. or even that much.
can you withdraw from 529 for before college tuition?
yes, K-12
can you pay student loan from 529
yes, up to $10,000 lifetime
What’s the most that can be contributed to a Coverdell from all sources for one indiv child?
$2,000
Insurable interest
a right or relationship to the insured property so that it will suffer financial loss from a loss
How much of income will most disability carriers issue?
50-60%
Is land insured?
no
HO-8
older home
HO-4
renters
HO-6
condo owner
What happens when the amount of the insurance carried is less than 80% of the dwelling’s replacement cost?
insurer will pay greater of:
- ACV (actual cash value)
- the formula (see card)
What’s the Property Loss Calculation Formula
(insur carried/ins req x loss)- deductbl = amt paid
Insurance required formula
replacement cost x coinsurance percentage (80) = ins required
Is Required percentage always 80?
no, sometimes 90% for commercial
Where’s Property Loss Calculation in the books?
Insurance 3-7 to 3-8
In an FMV < basis gift question, what are two outcomes you have to think about for taxability?
- amount of gift – gift tax
2. basis (adjusted) – cap gains tax
Where is the FMV < Basis info?
Estate 3-3 and 3-4
What’s the capital gains basis on a gift that is given when FMV < basis if it goes down?
the loss is determined by LESSER of date of gift FMV or original basis
What’s the taxability if the gift is sold between donor’s basis and FMV date of gift, what’s the tax status?
neither gain nor loss is realized
Is there still a corporate AMT?
no, repealed TCJA 2017
Amount of income exempt from AMT
Joint filers: $113,400 Indiv filers: $72,900
What happens if you contribute over 60% of your AGI to charity?
excess contribution is carried forward as an itemized deduction for 5 years or death (if sooner)
Six-year deduction window for charitable donation
five year carryover plus the year of contribution
what distinguishes a revocable living trust?
book no detail, i guess it’s revocable and while the grantor is living
Name two probate avoidance strategies
Revocable trusts, inter vivos trusts
Methods of property transfer at death
- Transfers through probate
- Transfer by operation of law (JTWROS)
- Transfers through trusts
- Transfers by contract (beneficiary)
Advantage of revocable trust over …NOT
trustee may be recognized over durable power
also, trust continues after death
Taxable termination
no $15k annual exclusion
termination of a non-skip person’s interest in income or principal of a trust, result: skip persons are only remaining beneficiaries
