Exam (elaborations)
CRPC Sample Tests.
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Exam of 80 pages for the course ITM C954 Combo. at ITM C954 Combo. (CRPC Sample Tests.)
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CRPC Sample TestsGift splitting - ANS-Allows a married couple to double their allowable annual exclusions
is only allowed for married couples
Ownership limited to spouses only - ANS-Joint tenancy tenancy by the entirety
community property
Grantor retained interest Trust Grit - ANS-Grantor can receive all income earned by the
trust
Qualified terminable interest Property Trust Q-tip - ANS-Income of a Q-tip goes to the
grantor's spouse
Charitable lead Trust CLT - ANS-The income goes to charity
Power of appointment trust POA - ANS-Income goes to the grantor's spouse
Valuation date for gifts - ANS-The date on which the transfer is completed
Gross estate - ANS-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 - ANS-Qualified dividends are subject to
the same tax rates applicable to long-term capital gains
The basis for charitable contribution deduction for stock - ANS-Based on the current fair
market value of the stock
Taxation of substitute payments in lieu of a dividend - ANS-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 - ANS-The basis is reduced to provide basis for
shares are received as a stock dividend
Net capital loss amount - ANS-$3,000 per year are deductible
,Taxation of qualified dividends - ANS-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 - ANS-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 - ANS-It is taxed in the year when the check was
received
Medical expenses and AMT - ANS-Most that are deducted are allowed for AMT
purposes 10% of AGI
Bargain element on exercise of an incentive stock option and AMT - ANS-Included as a
preference item for AMT
Private activity municipal bonds and AMT - ANS-Interest from private activity Muni
bonds is an AMT preference item except for bonds issued in 2009 and 2010
Home mortgage interest and AMT - ANS-Home mortgage interest is allowed for regular
and AMT
Adjusted gross income - ANS-Income remaining after subtracting the adjustments to
income
Domestic Partners transfer wealth to the other vs legal spouse - ANS-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 - ANS-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 - ANS-8%
Qlac - ANS-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 - ANS-...
,Proper written Financial goal - ANS-Specific in terms of gold dollar amount and time
frame
Income replacement percentages - ANS-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.
Investment policy attributes - ANS-Long-term perspective. Realistic. Clearly defined.
Asset allocation strategies - ANS-Tactical. Core satellite. Strategic
Correlation and diversification - ANS-The lowest correlation provides the most
diversification
Two major risks associated with Common Stocks - ANS-Market risk and business risk
Two major risks associated with Bond investing - ANS-Interest rate risk and purchasing
power risk
Calculating yield to maturity on the calculator - ANS-Set the end mode
Allowable earnings limit for 2015 for no reduction in Social Security benefits -
ANS-$15,720 earned income
Social Security benefits available when fully insured worker begins at full retirement age
- ANS-At full retirement age the workers spouse will receive at least 50% of the workers
PIA. Capitulo 4 retirement age the PIAA is reduced by 25/36 of 1% for each of the first
36 months the spouse is under full retirement age
How does tax-exempt interest affect social security taxation - ANS-All tax-exempt
income is included to determine a social security taxation a maximum of 85% of Social
Security benefits are subject
Features of defined benefit plans - ANS-Write a predetermined fix retirement benefit for
participating employees
Do Target benefit plans offer Survivor annuity benefits to married participants -
ANS-Qualified Pension Plan such as Target benefit plans are required to offer Survivor
, annuity benefits to married participants qualified profit sharing plans including stock
bonus plans and Aesop's generally are not subject to the Survivor annuity requirements
but more typically offer lump sum payouts
Describe an in lieu of plan - ANS-A pure Deferred Compensation Plan is sometimes
called in lieu of plan because the employee is receiving the employer's promise to pay
benefits in lieu of current income. death benefit plans provide no life time benefits to the
employee participant the employer helps to fund the retirement benefit provided by a
supplemental plan. some Deferred Compensation Plan provide additional benefits such
as benefits for disability
Similarity between qualified and non-qualified plans - ANS-They must enable the
employee to defer taxation on the plan funds until retirement
What can affect the retirement benefits in a defined contribution plan - ANS-The actual
investment returns. The value of the participants individual account balance at
retirement
Which allocations are permitted in a qualified profit sharing / 401K plan -
ANS-Investment earnings allocated in proportion to relative account balances and
employer contributions to the profit sharing plan allocated in proportion to relative
compensation
Describe the limits that apply to qualified defined contribution plans - ANS-Annual limit
is the lesser of 100% of pay or $53,000. Employer deduction limit is 25% for profit
sharing plans, money purchase plans, Target plans, have multiple defined-contribution
plans. The annual additions limit for a participant and multiple defined-contribution plans
of the employer or related employers must also be aggregated
Defined contribution is good for - ANS-Companies with uncertain cash flow Outlook,
employees at young age, and retirement savings needs within contribution limits
Target benefit plans are good for - ANS-It would skew contribution allocations to older
employees. Although the uncertainty of the amount of retirement benefit is a drawback.
Target benefit plans do not allow 401 k elective deferrals and employer contributions are
limited to 25 not 15% of covered payroll
What plan is good for a new business with fluctuating cash flow and key employees who
are older than the rank-and-file - ANS-An age weighted formula can be used by a profit
sharing plan
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