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AWMA MODULE 5 QUIZ INCOME TAX PLANNING FOR HIGH NET WORTH CLIENTS Questions & 100% Correct Answers $11.49   Add to cart

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AWMA MODULE 5 QUIZ INCOME TAX PLANNING FOR HIGH NET WORTH CLIENTS Questions & 100% Correct Answers

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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...

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  • September 12, 2024
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  • 2024/2025
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1 | P a g e | © copyright 2024/2025 | Grade 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

liability as an adjustment to income.


Master01 | September, 2024/2025 | Latest update

, 2 | P a g e | © copyright 2024/2025 | Grade A+



B) Self-employment tax is the government's way of discouraging

entrepreneurship and innovation.

C) Net earnings from self-employment must be calculated under the accrual

method of accounting.

D) Once the wage base has been exceeded, there is no self-employment

tax on the excess.

✓ ~~> A.




A taxpayer may deduct one-half of his or her self-employment tax liability as

an "above the line" deduction—an adjustment to income.




Which one of the following statements is incorrect regarding investment

interest expense?

A) Investment interest expense is deductible up to the amount of the net

investment income.

B) Excess investment interest expense cannot be carried forward into

succeeding tax years.

C) Interest paid or accrued to purchase or carry tax-exempt investments is

not deductible.

D) Investment interest expense may only be deducted if the taxpayer

itemizes.



Master01 | September, 2024/2025 | Latest update

, 3 | P a g e | © copyright 2024/2025 | Grade A+



✓ ~~> B




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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