AWMA MODULE 5 QUIZ INCOME TAX PLANNING FOR HIGH NET WORTH CLIENTS Questions & 100% Correct Answers
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Course
AWMA
Institution
AWMA
Which one of the following is NOT an allowable itemized deduction in
computing the alternative minimum taxable income?
A) Charitable contribution deduction
B) State and local income taxes
C) Qualified housing interest
D) Investment interest expense
~~> B.
State and local income taxes a...
AWMA MODULE 5 QUIZ INCOME TAX
PLANNING FOR HIGH NET WORTH CLIENTS
Questions & 100% Correct Answers
Which one of the following is NOT an allowable itemized deduction in
computing the alternative minimum taxable income?
A) Charitable contribution deduction
B) State and local income taxes
C) Qualified housing interest
D) Investment interest expense
✓ ~~> B.
State and local income taxes are not an allowable itemized deduction for
the AMT. Thus, clients in states with high income taxes (and property taxes)
are more likely to be affected by the AMT than those in states with lower
taxes. Remember that only $10,000 of taxes may be deducted as an itemized
deduction.
Which one of the following statements is true with regard to self-employment
taxes?
A) A taxpayer is allowed to deduct one-half of his or her self-employment tax
Net investment income is the taxpayer's investment income—typically
interest, nonqualified dividends, and short-term capital gains. Investment
interest is an itemized deduction. Excess investment interest expense can be
carried forward into succeeding tax years.
For a taxpayer with an AGI in excess of $150,000 for the prior tax year ($75,000
if married filing separately), the estimated tax penalty safe harbor is
A) 90% of the current year's tax liability or 100% of the prior year's tax liability.
B) 110% of the current year's tax liability or 125% of the prior year's tax liability.
C) 80% of the current year's tax liability or 120% of the prior year's tax liability.
D) 90% of the current year's tax liability or 110% of the prior year's tax liability.
✓ ~~> D.
The safe harbor is 90% of the current year's tax liability or 110% of the prior
year's tax liability if the taxpayer's prior year AGI exceeded $150,000.
If the prior year's AGI was $150,000 or less, then the safe harbor is 90% of the
current year's tax liability or 110% of the prior year's tax liability.
Master01 | September, 2024/2025 | Latest update
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