TCP Exam

Question 1

Life Estate in Trust vs. Remainder interest in trust

Answer 1

gifts into a life estate in a trust is a present interest gift that qualifies for the annual exclusion from gift tax

the remainder interest in trust is a future interest, and does NOT qualify for exclusion from gift tax

Question 2

A “term certain” interest and a “remainder interest” in property/trust

Answer 2

both are subject to gift tax at PV
term certain is a present interest eligible for annual gift tax exclusion
remainder interest is a future interest NOT eligible for the annual exclusion

Question 3

Restricted Stock award compensation

Answer 3

employee recognizes ordinary compensation on the vesting date when the restrictions on selling the stock lapse

Question 4

C-Corp limitations
1. Capital losses
2. Passive-Activity losses
3. NOL

Answer 4

1. back 3, forward 5
2. carried forward indefinitely
3. depends on year. Arising:
   2017 and prior - carried back 2 yrs, forward 20, offset 100% income
   2018-2-2020 - 5 yr carryback, indefinite carryforward, 100% income 2018-2020
   2021 and forward - carryforward indefinitely, offset 80% income

Question 5

AMT deductions
vs
AMT Unallowed deductions

Answer 5

allowed:
Casualty loss from federally declared disaster
UNALLOWED:
taxes
standard deduction
% depletion in excess of adj basis of property
interest income from certain private activity bonds (tax exempt for reg income)
NOL
Dealers in property sales installment method
construction contractors completed contract method (only % completion allowed)

Question 6

Dependent child standard deduction for earned income

Answer 6

if > $1,300 = earned income +450 (not to exceed regular stand. deduction)
if < $1,300 = $1,300

(note: kiddie tax = unearned income in excess of $2,600 taxed at parent’s marginal rate. $1,300 st. deduct + $1,300 at kid rate)

Question 7

Tax Basis in 1031 exchange

Answer 7

= FMV of property received - deferred gain + deferred loss