CRPC Sample Tests with Complete Solutions Graded A+
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CRPC Sample Tests with Complete Solutions Graded A+
Which of the following IS rue regarding the tax-destructibility of qualified long-term care insurance (QLTCI) premiums? - Answer-Individuals and couples filing jointly can deduct medical expenses that exceed 7.5% of adjusted gross income (AGI)....
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CRPC Sample Tests with Complete
Solutions Graded A+
Which of the following IS rue regarding the tax-destructibility of qualified long-term care
insurance (QLTCI) premiums? - Answer-Individuals and couples filing jointly can deduct
medical expenses that exceed 7.5% of adjusted gross income (AGI). QLTCI premiums
qualify as medical expenses.
Self-employed people may deduct QLTCI premiums regardless of the relationship
between income and medical expenses.
Partners can deduct QLTCI premiums as a business expense.
Partnership income is taxed at the personal level. Accordingly, QLTCI premiums are
deductible in the same manner as for sole proprietors.
A type of trust from which the grantor can receive all income earned by the trust is a -
Answer-grantor retained interest trust (GRIT).
The grantor of a GRIT can retain the right to all trust income. The income of a QTIP and
POA trust goes to the grantor's spouse, and the income of a CLT goes to a charity.
The valuation date for gifts is - Answer-the date on which the transfer is completed.
The date of completion of the gift is the valuation date for gifts.
The gross estate is best defined as all property - Answer-that is subject to the federal
estate tax.
The gross estate includes all the property that is subject to the federal estate tax,
whether or not owned by the decedent, and whether or not included in the probate or
taxable estate.
Which one of the following is correct regarding the tax treatment when shares of stock
are involved? - Answer-The reinvestment of ordinary dividends into additional shares of
stock may be subject to long-term capital gain rates.
Dividends, even if reinvested, are generally taxable. Qualified dividends are subject to
the same tax rates applicable to long-term capital gains. The charitable contribution
deduction for stock held for the long term is based on the fair market value of the stock.
Substitute payments in lieu of a dividend are not subject to preferential treatment, and
are treated as ordinary income. The basis of previously-owned shares is reduced to
provide basis for the shares that are received as a stock dividend.
Qualified dividends are generally subject to a preferential tax rate of - Answer-15% or
20%.
,Qualified dividends are subject to a 15% maximum rate if the dividends fall into a 25%-
35% bracket; 20% if the dividends fall into the 39.6% bracket. Net capital losses of
$3,000 per year are deductible. Dividends are subject to taxation, even if reinvested. In
a taxable account, traders certainly do need to take into account the timing and
taxability of their security transactions.
What is the tax treatment for a shareholder participating in a common stock's dividend
reinvestment program? - Answer-The shareholder is treated as if he or she received a
cash dividend equal to the fair market value of the shares purchased under the plan.
The dividend paid from the stock is simply used to purchase more shares of stock. The
fair market value of the shares purchased is generally taxed at a 15% or 20% rate.
Which of the following is true regarding Medicare coverage of long-term care (LTC)
expenses? - Answer-Medicare will pay expenses only if an individual has been
hospitalized for at least three days prior to entering the nursing home.
Medicare covers only a brief period of convalescence, often up to 100 days only.
Medicare will not pay expenses unless a doctor has certified the need for skilled nursing
care.
Medicare covers expenses only in Medicare-certified facilities.
HSA qualified medical expenses - Answer-premium payments for Medicare Part A
premium payments for Medicare Part B
premium payments for long-term care insurance
NOT: Medigap premiums
Features of HSAs - Answer-Contributions are tax-deductible and grow tax-free.
Withdrawals used to pay for qualified medical expenses are tax-free.
HSA assets are portable and may be rolled over into other HSAs.
CANNOT make tax-deductible contributions to HSA if enrolled in Medicare
When discussing disability policies, the ideal policy is - Answer-non-cancellable.
"Non-cancellable" guarantees the insured the right to renew the policy for a stated
number of years, with premiums at renewal guaranteed. This is preferred to guaranteed
renewable.
Which is the most liberal definition of disability? - Answer-Own occupation
All of the following are true regarding Medicare Advantage plans - Answer-individuals
with End-Stage Renal Disease (ESRD) are not eligible.
Individuals with ESRD are not eligible for Medicare Advantage plans; however, ESRD
beneficiaries currently in a Medicare plan can remain in the plan.
beneficiaries must live in the service area of a health plan.
,Beneficiaries must live in the service area of a health plan. The service area is the
geographic area in which the plan accepts enrollees.
Gift splitting - Answer-Allows a married couple to double their allowable annual
exclusions is only allowed for married couples
Ownership limited to spouses only - Answer-Joint tenancy tenancy by the entirety
community property
Grantor retained interest Trust Grit - Answer-Grantor can receive all income earned by
the trust
Qualified terminable interest Property Trust Q-tip - Answer-Income of a Q-tip goes to the
grantor's spouse
Charitable lead Trust CLT - Answer-The income goes to charity
Power of appointment trust POA - Answer-Income goes to the grantor's spouse
Valuation date for gifts - Answer-The date on which the transfer is completed
Gross estate - Answer-Includes all the property that is subject to the federal estate tax
whether or not owned by the decedent and whether or not included in the the probate or
taxable estate
Taxation of reinvestment of ordinary dividends - Answer-Qualified dividends are subject
to the same tax rates applicable to long-term capital gains
The basis for charitable contribution deduction for stock - Answer-Based on the current
fair market value of the stock
Taxation of substitute payments in lieu of a dividend - Answer-Substitute payments in
lieu of a dividend are not subject to preferential treatment and are treated as ordinary
income
How does a stock dividend affect basis - Answer-The basis is reduced to provide basis
for shares are received as a stock dividend
Net capital loss amount - Answer-$3,000 per year are deductible
Taxation of qualified dividends - Answer-Dividends are taxed at 15% or 20% if the
dividends fall into the 39.6% bracket
Text treatment for a shareholder participating in common stock dividend reinvestment
program - Answer-The shareholder is treated as if he received a cash dividend equal to
the fair market value of the shares purchased under the plan
, When is earned income taxed - Answer-It is taxed in the year when the check was
received
Medical expenses and AMT - Answer-Most that are deducted are allowed for AMT
purposes 10% of AGI
Bargain element on exercise of an incentive stock option and AMT - Answer-Included
as a preference item for AMT
Private activity municipal bonds and AMT - Answer-Interest from private activity Muni
bonds is an AMT preference item except for bonds issued in 2009 and 2010
Home mortgage interest and AMT - Answer-Home mortgage interest is allowed for
regular and AMT
Adjusted gross income - Answer-Income remaining after subtracting the adjustments to
income
Domestic Partners transfer wealth to the other vs legal spouse - Answer-Governor
domestic partner cannot take a marital deduction in excess of the gift tax annual
exclusion for the transfer while a donor spouse could
If a domestic partner is appointed as conservator or Guardian - Answer-The individual
should make his or her desire to have the domestic partner appointed by executing
written documents approved by state law as intestacy laws typically follow the bloodline
Per year 4 retirement benefit increase over full retirement age - Answer-8%
Qlac - Answer-Suitable for those who are healthy and have a family history of longevity
and those entering retirement with Social Security as their only source of guaranteed
income
Bucket approach to withdrawals from retirement savings - Answer-...
Proper written Financial goal - Answer-Specific in terms of gold dollar amount and time
frame
Income replacement percentages - Answer-Income replacement percentages vary
between low-income and high-income retirees. Income replacement ratios should not
be used as the only basis for planning. Are useful for younger clients as a guide to their
long-term planning and investing.
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