Exam 16: Investment and Personal Financial Planning

Last year, Mr. Margot purchased a limited interest in a business partnership, which is her only passive activity. Last year, she was allocated $14,900 of the partnership's ordinary business loss. This year, she was allocated $7,700 of the partnership's ordinary business income. Which of the following statements is false?

An owner of a life insurance policy that includes an investment element must recognize income equal to the annual increase in the policy's cash surrender value.

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

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. Beal recognized a $42,400 net long-term capital gain and a $33,000 net short-term capital loss this year. What is her current net income tax cost from her capital transactions if her marginal rate on ordinary income is 39.6%?

Two years ago, James loaned $60,000 to his friend. The debt is now uncollectible. If the loan created a bona fide debt, James recognizes a short-term capital loss.

Which of the following statements about the individual capital gains and losses is false?

Emil Nelson paid $174,500 for an annuity that will pay him $1,300 per month for life. Based on Emil's age, his expected return is $405,813. This year, Emil received 12 payments totaling $15,600. How much of this total is taxable income?

Which of the following statements about Section 1244 stock is true?