Exam 16: Investment and Personal Financial Planning

Twenty years ago,Mrs.Cole purchased an insurance policy on her own life.Mrs.Cole died this year,and the policy paid the $300,000 death benefit to her son Jeffrey.During her life,Mrs.Cole paid total premiums of $71,200 on the policy.Which of the following statements is true?

Investors must hold qualified small business stock for more than five years in order to exclude a percentage of the gain on sale of such stock from gross income.

Six years ago,Mr.Ahmed loaned $10,000 to a neighbor in exchange for an interest-bearing debt obligation.This year,the neighbor informed Mr.Ahmed that he was defaulting on the debt.What are the tax consequences to Mr.Ahmed of this bad debt?

As a general tax planning rule,individuals should sell assets that have declined in value prior to death and keep appreciated property to transfer to their heirs at death.

Investment expenses are an itemized deduction.

On April 19 of this year,Sandy learned that her stock investment had become worthless.The stock is deemed to be worthless on December 31 of this year.

Lindsey owns and actively manages an apartment complex.This year,the complex generated a $40,300 net loss.If Lindsey's AGI before considering this loss is $118,200 and she owns no other passive activities,how much of the loss is deductible this year?

Mr.Carp,a single taxpayer,recognized a $44,000 long-term capital gain,a $12,000 short-term capital gain,and a $10,000 long-term capital loss.Compute Mr.Carp's 2019 income and Medicare contribution tax if his taxable income before consideration of his capital transactions is $465,000,none of which is investment income

Mrs.Lindt exchanged 212 shares of Nipher common stock for 773 shares of Newland common stock.Her basis in the Nipher stock was $49,200,and the fair market value of the Newland stock was $138,000.Which of the following statements about the exchange is true?

Ms.Plant owns and actively manages an apartment complex.This year,the complex generated a $32,790 net loss.If Ms.Plant's AGI before considering this loss is $196,100 and she owns no other passive activities,how much of the loss is deductible this year?

Electing to reinvest dividends in additional shares of stock does not defer income recognition.

In 1996,Mr.Exton,a single taxpayer,contributed $30,000 in exchange for 100 shares of Morton stock.In 2005,he paid $43,000 to another shareholder to purchase 100 more shares of Morton stock.Morton stock qualified as Section 1244 stock when it was issued.This year,Mr.Exton sold his 200 Morton shares for $250 per share.What is the amount and character of Mr.Exton's recognized loss?

Mr.Lee made the following transfers this year.Which of the transfers are treated as gifts for federal tax purposes?

At the beginning of the year,Calvin paid $5,000 for 60 shares of Eddington stock.In June,he received a $300 cash distribution with respect to the stock.His Form 1099-DIV reported that $170 was an ordinary dividend and $130 was nontaxable.Compute Calvin's tax basis in his 60 shares at year-end.

Ms.Lopez paid $7,260 interest on a mortgage on undeveloped land that she holds as an investment.Ms.Lopez's AGI is $112,200,which includes $4,900 interest income from a certificate of deposit.Which of the following statements is true?

Sixteen years ago,Ms.Herbert purchased an annuity for $96,000.Beginning in September of this year,the annuity began paying Ms.Herbert $4,000 per month for the rest of her life.Based on her age,Ms.Herbert's expected return is $300,000.How much of the $16,000 that she received this year is included in taxable income?

A beneficiary's basis of inherited property equals the decedent's adjusted basis immediately prior to death.

Which of the following statements about annuity contracts is true?

Which of the following are included in a decedent's taxable estate?

Mr.and Mrs.Golding own 13,850 shares in PTJ mutual fund.This year,they received a $6,390 cash distribution from PTJ.Which of the following statements is false?