Study from Wrong Answers Flashcards
To allow a DE spouse to receive income from an A trust, the spouse is given a ____________ power of appointment whereas in a B trust, the spouse is given a ___________ power of appointment.
General; limited
What are the tax consequences of selecting the QTIP election?
Anything as part of the QTIP qualifies for the unlimited marital selection and is not taxed.
However, the assets are then included in the surviving spouses estate
Each of the following vehicles for charitable giving generates a deduction equal to the present value of the charity’s remainder interest EXCEPT:
Charitable Remainder Trust
Pooled Income Fund
Donor-Advised Fund
Charitable Gift Annuity
Donor-advised funds only allows a deduction based on the type of property contributed, subject to AGI limitations
When using a charitable gift annuity to make payments to a spouse, if the spouse receives all payments and has a general power of appointment following the donor’s death, _______________________ is available.
a marital deduction
deduction for the PV of the charity’s remainder interest
deduction for the PV of the charity’s income interest
an income tax deduction limited to 30% for cash and to 20% for LTCG property
a marital deduction
For gift annuity payments made to a spouse, a marital deduction is available if the spouse receives all annuity payments and has general POA over payments after the donor’s death
What kind of marital deduction is available for non-US citizens?
None
What is the early withdrawal penalty for 457’s?
There isn’t one
What funds can a 403(b) invest in?
Mutual funds and annuities
Which annuitization method provides the highest monthly income to the annuitant?
Life, 10-year certain
Life, 20-year certain
Life, refund certain
Life only
Life only
Biggest payment but all payments end when the annuitant dies. (better than 10 years, I guess??)
‘Annuity Certain’ is a subcategory within which of the following annuity features?
Guaranteed Minimums
How Funds are Invested
Lives Covered
Forms of Payment
Forms of Payment
‘Annuity Certain’ can refer to either a Fixed Period or Fixed Payment.
What does rule 72(t) refer to?
Sep from service at or after 55
An exception to qualified plans early withdrawal penalties, (BUT NOT FROM IRAs)
What’s the way to remember FAFSA EFC percentages?
low to high: A ssets before I income
What is the “final” step in determining the EFC?
Subtracting the family contribution calculation from the cost of tuition
When calculating the taxes and penalty on a 529 withdrawal for non-qualified expenses, what is the formula?
Total - principle / total
What are tax sheltered annuities?
TSAs or 403(b)s
What is the key to differentiating collision from comprehensive policy use?
Hitting STATIONARY objects (or other cars) - collision
Hitting NON-STATIONARY objects - comprehenisve
Rollovers may be made without penalty from a section 529 tuition account to a section 529A ABLE account if
I) is a qualified relative per the IRS
II) is an eligible member of the family
II only
Rollovers may be made without penalty from a section 529 tuition account to a section 529A ABLE account if the beneficiary of the ABLE account is the DESIGNATED beneficiary of the tuition account or is an ELIGABLE member of the family.
What are REITs?
Companies that invest in real estate instead of financial assets to provide passive income.
Two types: Equity and Mortgage (REMICs of 2008)
What are the tax filing penalties?
Fraud: 75%
Frivolous: $5000
Negligence: 20%
Failure to file: 5% per month up to 25%
Failure to pay: .5% per month up to 25%
What method of accounting must be used if there is inventory involved in the business?
Accrual. Hybrid if there is a service component
What is the formula to determine mixed-use rental deductions?
rental days / total days (pers & rent) used * total expenses
Cannot deduct more than rental income
How much can educators deduct - Single? MFJ?
Single or married, you can deduct up to $300 qualifying expenses per educator
What happens if failure to file and failure to pay taxes before 5 months and when it exceeds 5 months?
Prior to 5 months, only failure to file is levied. After 5 months, only failure to pay is levied
What kind of student loan debt forgiveness can be deducted from gross income?
Only forgiven debt using the public service loan forgiveness program
What is the correct discount rate used in the NPV formula?
The investor’s required rate of return