Exam 8: Tax Planning

Your client owns a company within a building he own on a piece of land that he also owns. He is concerned with deprecation issues for tax purposes. What cannot be depreciated for taxes?

An activity is considered a passive activity if the individual does not do what?

Which type of taxpayer may be affected by passive activity and at-risk rules?

Rachel learned that her grandmother died and left her an inheritance in 2013. At that time, she decided that she would contribute at least a portion of that inheritance to charity. In 2014, she received the full amount of the inheritance. On December 15, 2015, she made a pledge and wrote a check to the charity. She mailed the check on January 2, 2016, and the charity received the check within a few days. In which year can Rachel deduct the contribution?

Personal or real property assets used in trade or business that are held for more than one year are what type of asset?

Buying shares back after selling them at a loss can negate tax deduction. To maintain the ability to deduct the loss, how long must one wait to repurchase those shares back?

Your client is considering becoming a trust grantor, but is concerned about tax obligations that they may face; what should the client be informed of?

What is the purpose of passive activity and at-risk rules?

Which of the following is the term used for items that do not reverse over time?

Which is not an individual having to file a tax return even if their gross income is below the required amount?

Your client informs you that he cheated on his income taxes by omitting 30 percent of his gross income and he's not really worried about being caught. You inform him that the IRS has many different systems at their disposal to catch cheaters and that the IRS has a statute of limitation for fraud detection. Under this scenario, how long is the statute of limitation?

To what other areas of financial planning does tax planning most closely apply?

Which of the following is a non-taxable type of income?

What system is considered a parallel income tax system?

Which is not a disadvantage for Married Filing Separately (MFS)?

Your client has an apartment building in Denver and wants to "purchase" a condo in Detroit that he intends to rent out so he fills out Form 8824. Instead of renting out the property in Detroit, he lives in it. What concept is your client attempting to accomplish?

A gift to which of the following is generally deductible?

There are several tax consequences of gain or loss on sale of assets; capital assets for businesses are any assets held for long-term investment. What category would not be considered a capital asset?

Which of the following statement about adjusting the basis of S corporation stock is true?

The acceleration of deductions reduces taxes in the current year; there are several strategies for accomplishment. What item below would be a strategy?