Question 1

What type of property is not excluded from the definition of like-kind exchanges?

Accepted Answer

A) Stocks, bonds, and notes. 
B) Inventory property used for business. 
C) City real estate for a ranch or farm. 
D) Foreign real estate. 
A) Stocks, bonds, and notes. 
B) Inventory property used for business. 
C) City real estate for a ranch or farm. 
D) Foreign real estate.

Question 2

In regards to tax planning, what is the financial planner's goal?

Accepted Answer

A) Maximize the client's tax due 
B) Minimize the client's tax due 
C) Maximize the client's after-tax wealth 
D) Maximize the client's income that can be hidden from the IRS 
A) Maximize the client's tax due 
B) Minimize the client's tax due 
C) Maximize the client's after-tax wealth 
D) Maximize the client's income that can be hidden from the IRS

Question 3

What is the amount of the net investment income tax?

Accepted Answer

A) 2)3% 
B) 3)8% 
C) 4)2% 
D) 5)3% 
A) 2)3% 
B) 3)8% 
C) 4)2% 
D) 5)3%

Question 4

Your client has barter income, deductions for office-in-the-home expenses, and substantial business losses. At tax time you inform the client that the IRS may audit due to their use of what system?

Accepted Answer

A) Discriminate Functions System 
B) Targeted Programs 
C) Civil Fraud 
D) Taxpayer Compliance Measurement Program 
A) Discriminate Functions System 
B) Targeted Programs 
C) Civil Fraud 
D) Taxpayer Compliance Measurement Program

Question 5

In what year was the current alternative minimum tax system created?

Accepted Answer

A) 1950 
B) 1969 
C) 1974 
D) 1978 
A) 1950 
B) 1969 
C) 1974 
D) 1978

Question 6

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?

Accepted Answer

A) Property used in a trade to produce income. 
B) Property that has loss value over time. 
C) Building expenditures. 
D) Land 
A) Property used in a trade to produce income. 
B) Property that has loss value over time. 
C) Building expenditures. 
D) Land

Question 7

Bart owns a brewery that specializes in a beer containing caffeine. He recently purchased a $20,000 coffee maker to help add a kick to his brew. He expects the coffee maker to have a useful life of ten years and have a salvage value of $2,000. If Bart's brewery, Bart's Brewskies, is using the double declining depreciation method, how much would he depreciate in the first year?

Accepted Answer

A) $5,000 
B) $1,000 
C) $2,500 
D) $4,000 
E) $3,500 
A) $5,000 
B) $1,000 
C) $2,500 
D) $4,000 
E) $3,500

Question 8

What law(s) is based on custom, general principles, and is embodied in case law?

Accepted Answer

A) Alimony Laws 
B) Child Support Laws 
C) Common Law 
D) Divorce Laws 
A) Alimony Laws 
B) Child Support Laws 
C) Common Law 
D) Divorce Laws

Question 9

Divorce happens. Often there are children involved needing child support. Often there is property involved that needs "splitting." Sometimes alimony must be paid. Payments as alimony must meet a certain set of rules. What condition is a payment as alimony rule?

Accepted Answer

A) Payment must be made in cash. 
B) Payment must be simultaneous with child support (if applicable). 
C) Front loading should not be avoided. 
D) Payer and payee must file a joint tax return. 
A) Payment must be made in cash. 
B) Payment must be simultaneous with child support (if applicable). 
C) Front loading should not be avoided. 
D) Payer and payee must file a joint tax return.

Question 10

Your client's husband just died. She has an 8 year old daughter. How long may your client file jointly for federal taxes?

Accepted Answer

A) One year 
B) Two years 
C) Indefinitely 
D) Once the spouse has passed, the surviving spouse must file single or head of household. 
A) One year 
B) Two years 
C) Indefinitely 
D) Once the spouse has passed, the surviving spouse must file single or head of household.

Question 11

Your clients are a young married couple that is not sure how to best file their income taxes. They think they should itemized deductions because they have rental real estate. How should this couple file?

Accepted Answer

A) Married Filing Separately 
B) Head of Household 
C) Married Filing Jointly 
D) Single 
A) Married Filing Separately 
B) Head of Household 
C) Married Filing Jointly 
D) Single

Question 12

What are assets placed in service between 1981 and 1986 for depreciation rules are often referred to?

Accepted Answer

A) Modified Accelerated Cost Recovery System 
B) Accelerated Cost Recovery System 
C) Accelerated Cost Basis 
D) There is no correlation between asset placement and dates of service. 
A) Modified Accelerated Cost Recovery System 
B) Accelerated Cost Recovery System 
C) Accelerated Cost Basis 
D) There is no correlation between asset placement and dates of service.

Question 13

What IRS form does an individual taxpayer use to figure any alternative minimum tax?

Accepted Answer

A) Form 1040 
B) Form 1040A 
C) Form 6251 
D) Form 8801 
A) Form 1040 
B) Form 1040A 
C) Form 6251 
D) Form 8801

Question 14

What trust has the personal exemption amount of $300?

Accepted Answer

A) Complex Trusts 
B) Simple Trusts 
C) Both A and B 
D) Neither A or B 
A) Complex Trusts 
B) Simple Trusts 
C) Both A and B 
D) Neither A or B

Question 15

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

Accepted Answer

A) The cash distribution is considered a taxable return of investment 
B) Losses are non-deductible 
C) K-1 Schedules are not used 
D) Losses are deductible to the extent of the owner's equity investment and debt obligation. 
A) The cash distribution is considered a taxable return of investment 
B) Losses are non-deductible 
C) K-1 Schedules are not used 
D) Losses are deductible to the extent of the owner's equity investment and debt obligation.

Question 16

What is the difference of an asset that is sold below fair market value referred to as?

Accepted Answer

A) Wash Sales 
B) Bargain Element 
C) Depreciation Recapture 
D) Personal Property Rules 
A) Wash Sales 
B) Bargain Element 
C) Depreciation Recapture 
D) Personal Property Rules

Question 17

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

Accepted Answer

A) Continue investing 
B) Materially participate 
C) Have other means of income 
D) Invest over a certain amount of money 
A) Continue investing 
B) Materially participate 
C) Have other means of income 
D) Invest over a certain amount of money

Question 18

Which of the following is true regarding tax evasion?

Accepted Answer

A) The U.S. Supreme Court states that taxpayers should arrange transactions to pay the most tax possible 
B) Using legal means of reducing the taxpayer's tax liability is considered tax evasion 
C) Taxpayers who lie on their tax returns are rarely caught 
D) Taxpayers found guilty of tax evasion must pay the tax that would otherwise have been due 
A) The U.S. Supreme Court states that taxpayers should arrange transactions to pay the most tax possible 
B) Using legal means of reducing the taxpayer's tax liability is considered tax evasion 
C) Taxpayers who lie on their tax returns are rarely caught 
D) Taxpayers found guilty of tax evasion must pay the tax that would otherwise have been due

Question 19

Where, on the tax return, can a taxpayer claim a charitable deduction?

Accepted Answer

A) As a standard deduction 
B) As an itemized deduction 
C) As a credit 
D) As an adjustment to income 
A) As a standard deduction 
B) As an itemized deduction 
C) As a credit 
D) As an adjustment to income

Question 20

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

Accepted Answer

A) Investors in certain partnerships 
B) Investors in limited liability companies 
C) Business owners who do not participate directly in routine management 
D) All of the above 
A) Investors in certain partnerships 
B) Investors in limited liability companies 
C) Business owners who do not participate directly in routine management 
D) All of the above

What type of property is not excluded from the definition of like-kind exchanges?

In regards to tax planning, what is the financial planner's goal?

What is the amount of the net investment income tax?

Your client has barter income, deductions for office-in-the-home expenses, and substantial business losses. At tax time you inform the client that the IRS may audit due to their use of what system?

In what year was the current alternative minimum tax system created?

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?

What law(s) is based on custom, general principles, and is embodied in case law?

Divorce happens. Often there are children involved needing child support. Often there is property involved that needs "splitting." Sometimes alimony must be paid. Payments as alimony must meet a certain set of rules. What condition is a payment as alimony rule?

Your client's husband just died. She has an 8 year old daughter. How long may your client file jointly for federal taxes?

Your clients are a young married couple that is not sure how to best file their income taxes. They think they should itemized deductions because they have rental real estate. How should this couple file?

What are assets placed in service between 1981 and 1986 for depreciation rules are often referred to?

What IRS form does an individual taxpayer use to figure any alternative minimum tax?

What trust has the personal exemption amount of $300?

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

What is the difference of an asset that is sold below fair market value referred to as?

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

Which of the following is true regarding tax evasion?

Where, on the tax return, can a taxpayer claim a charitable deduction?

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

Education Planning

Education Planning

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Estate Planning

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Exam 8: Tax Planning

What type of property is not excluded from the definition of like-kind exchanges?

In regards to tax planning, what is the financial planner's goal?

What is the amount of the net investment income tax?

Your client has barter income, deductions for office-in-the-home expenses, and substantial business losses. At tax time you inform the client that the IRS may audit due to their use of what system?

In what year was the current alternative minimum tax system created?

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?

What law(s) is based on custom, general principles, and is embodied in case law?

Divorce happens. Often there are children involved needing child support. Often there is property involved that needs "splitting." Sometimes alimony must be paid. Payments as alimony must meet a certain set of rules. What condition is a payment as alimony rule?

Your client's husband just died. She has an 8 year old daughter. How long may your client file jointly for federal taxes?

Your clients are a young married couple that is not sure how to best file their income taxes. They think they should itemized deductions because they have rental real estate. How should this couple file?

What are assets placed in service between 1981 and 1986 for depreciation rules are often referred to?

What IRS form does an individual taxpayer use to figure any alternative minimum tax?

What trust has the personal exemption amount of $300?

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

What is the difference of an asset that is sold below fair market value referred to as?

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

Which of the following is true regarding tax evasion?

Where, on the tax return, can a taxpayer claim a charitable deduction?

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

Education Planning

Education Planning

Estate Planning

Estate Planning

General Principles of Financial Planning

General Principles of Financial Planning

Investment Planning

Investment Planning

Professional Conduct and Regulation

Professional Conduct and Regulation

Retirement Savings and Income Planning

Retirement Savings and Income Planning

Risk Management and Insurance Planning

Risk Management and Insurance Planning

Tax Planning

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