Reference no: EM133272837

Question 1.

Which of the following is/are true concerning charitable lead trusts?

a) The tax deduction is based on the remainder interest to the beneficiaries.

b) They are never grantor trusts.

c) They require the property to be donated to the charitable beneficiary.

d) They may be either annuity trusts or unitrusts.

Question 2.

In general, all but which of the following may present an opportunity for a postmortem income tax election?

a) Filing a joint return for the year of death, where the surviving spouse remarries before the end of the year.

b) A U.S savings bond where the decedent did not elect to accrue and report income interest.

c) The decedent made an installment sale in the year of death.

d) Election of a fiscal year for the estate.

Question 3.

Peter owns Detail Masters Inc., an auto paint and body shop. To obtain funds to build an addition to the shop, he wants to arrange a sale-leaseback of shop equipment with another local business. Should the validity of this transaction come into question, which of the following questions would a court consider to determine if there is a lease?

I. Are rental payments in excess of current fair rental value?

II. Will the leasor acquire title following payment of the required amount of rentals?

III. Is accelerated depreciation being taken on the leased property?

a) I, II and III

b) I only

c) I and II

d) I and III

Question 4.

An executive may incur an alternative minimum tax (AMT) liability when an ISO option is exercised.

True

False

Question 5.

Disadvantages of a 401(k) plan include

a) benefits are not an adequate source of retirement income for those entering the plan relatively close to retirement

b) employer bears the investment risk

c) employer may need to match contributions to avoid having the plan deemed discriminatory

d) a and b

e) a and c

Question 6.

Which of the following is (are) true regarding elective deferrals in a Section 401(k)?

a) elective deferrals are not subject to Social Security and Federal Unemployment payroll taxes

b) if the company elects to have a safe harbor plan, elective deferrals must meet the actual deferral percentage test

c) elective deferrals are always made on an after-tax basis

d) account funds can be withdrawn without a premature distribution penalty if the employee becomes disabled or dies

e) since employees elect the amount of funds to defer, nondiscrimination tests do not apply to elective deferrals