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Brad would like to set up a retirement plan for his employees. He would need to obtain a determination letter from the IRS in order to:
Tempest Systems, Inc., provides some of its employees with deferred compensation arrangements. Under the Employee Retirement Income Security Act (ERISA), the company would be able to exempt certain deferred compensation arrangements from its coverage, including:
Michael has set up a qualified retirement plan for the employees at his machine parts manufacturing company. How often would he need to transfer funds on behalf of the plan?
MedTech, Inc., would like to offer deferred bonuses to its employees in years when the company shows a profit. What are such profit-connected plans often called?
Paul entered into a deferred compensation agreement as an executive officer with his new company, RJ Tool. This agreement would establish that:
Brandon used the cash method to report income, meaning he would report it in the year that actual receipt occurred. However, his accountant advises him that, under this method, income inclusion could also result from:
At an in-house staff-training seminar, you are explaining that the IRS uses constructive receipt to determine possible inclusion of deferred income. To assist your staffs’ understanding, how should you categorize the principle of constructive receipt?
Dean is a senior manager of a large pharmaceutical firm and has purchased some surety bonds. This type of third party guarantee would be commonly used to protect future payments to Dean in a(n):
Brand Well Products, Inc., needs to set up the accounting for its nonqualified deferred compensation plans. You have explained that such plans are governed by two sets of accounting rules. However, which set directs how to prepare income tax returns?
During an estate planning meeting with your client, George, you discuss the potential use of life insurance in his plan to pass wealth to his heirs and further explain to him that life insurance is often:
In a staff-training seminar, you are describing how life insurance can be used to pay death taxes and estate settlement expenses. In addition, you should explain that funds used to pay these taxes and expenses are often referred to as:
After an absence of many years, a colleague is returning to estate planning and asks the status of §101(b). You should explain that §101(b) formerly provided an employee’s estate or beneficiary a tax exemption for funds received from the decedent’s employer. Up to what amount was income tax free under this former but, now repealed, provision?
John and June meet with their advisor to plan their estate. They would like to know, when it comes to life insurance, what they could do to avoid estate taxes. Their advisor explains that one way they could do this is make sure the:
Andrew has transferred his life insurance policy to his son, Matt. If Andrew is able to treat the policy transfer as a gift, the value of this gift would then be the policy’s:
Mark is considering purchasing term insurance, which would provide a predetermined degree of protection for a premium. However, this type of policy would then only provide him with:
Jeremy is considering purchasing renewable term insurance, since he likes that it can be renewed annually. However, he would also need to be aware that renewing annually could result in:
Thomas would like to purchase a whole life insurance policy. His advisor has explained that the premiums on whole life insurance typically stay the same throughout the contract. However, during the coverage, he should see an increase in:
Gary would like to establish a life insurance trust. However, prior to transferring a community property policy to the trust, his advisor wants him to consider converting the policy to his spouse’s separate property, since this would:
Bruce created a private annuity wherein he transferred property to his sister Carol in exchange for her unsecured promise to make fixed periodic payments. In this type of arrangement, for how long would Carol make these periodic payments?
The shareholders of Ultra Flux Technologies would like to enter into an entity purchase buy-sell agreement. However, a potential tax problem they could face would be that:
Alan and his sons are shareholders in a closely-held corporation and want to avoid double attribution in a pending redemption of Alan’s stock by waiving family attribution. However, to do so, the entity and Alan must agree to three terms including:
Sally would like to enter into a buy-sell agreement. While there are many ways to determine the value of closely held stock in a buy-sell agreement, the most effective valuation method Sally should use would be:
Donald has decided to sell a home he and his spouse have lived in for 30 years. Since Donald will realize a significant profit on the sale, the result would be the:
Frank is in a 10% income bracket and has realized capital gains on the sale of some land he owns. What would be the initial capital gains rate for him given his level of income?
At an in-house staff-training seminar, you are tracing the history of capital gains and outlining the various brackets that have existed. While the brackets have been relatively stable in recent years, you mention that a capital gain bracket was repealed in 2003. Which rate group was repealed at that time?
Your brother is studying for his real estate license and asks about the home sale exclusion prior to its current enactment. You explain that former §121 did grant homeowners age 55 or older an exclusion. However, under this prior law, how much of the gain on a sale of a primary residence could be excluded from gross income?
Jane wants to sell her home in Boise. Under current §121, she would need to have owned and used a property as her principal residence for a minimum of two years during a five-year period to qualify for the exclusion. When would the five-year period end for Jane?
Eric and Amanda are married but work in two different states and have separate residences. You explain that each is entitled to a §121 home sale exclusion. But, how much would each be able to exclude from income?
Tyler learned he still would qualify for a portion of the §121 exclusion even though he failed the two-year requirement when he sold his home. The main reason he still qualified was that:
In 2017, Keith moved to Dallas from Spokane to take a new position at a large technology firm. Since he moved for job purposes, he likely was able to deduct certain moving expenses under §217. In this case, the time frame during which he could have considered moving expenses as closely associated in time to the beginning of work would be:
Jerry moved from Winona, Minnesota, where he held an academic post, to a new job at a company in Minneapolis. To deduct these expenses prior to 2018 under §217, Jerry would have needed to make sure the location of the new job was at least ________ farther from the former home than the distance between their former home and former workplace.
Marvin would like to create a marital deduction trust for himself and his spouse giving the survivor a general power of appointment over assets. Under such a power, the survivor would be:
Craig would like to set up a qualified terminable interest trust, which would allow postponement of estate tax until the death of the second spouse. Another benefit of using such a trust would be that:
Nicole learned she is able to pass a portion of her estate free of federal estate tax. What term is used for the size of an estate that can be passed tax-free?
When Steve died in 2010, he left his estate to his spouse, Nora. In consultation with Nora, the executor of Steve’s estate elected to use the modified carryover basis rules. These rules applied to property Nora acquired from Steve, which was:
As executor of his sister’s estate and using a special election for 2010, John had the ability to allocate an increase in basis to selected beneficiaries at death under the modified carryover basis rules. Up to what amount could John have increased the basis to his sister’s surviving spouse?
Warren’s principal reasons for creating a trust are for asset management and protection. However, Warren’s advisor points out that another compelling reason Warren might want to set up a trust would be for:
In preparing your office presentation for staff on trusts, you have found it helpful to categorize trusts in several ways. What is one way to differentiate them based on when they are created?
Leslie has established a living “A-B-C” trust for himself and his spouse, LuAnn, which creates three trusts upon the death of the first spouse. Should Leslie die first, LuAnn’s trust would typically be referred to as the:
Nathan created a charitable income trust to primarily generate a charitable deduction. As a consequence, his advisor has recommended that the most appropriate type of assets that Nathan could transfer into this trust would be:
Kyle, in creating his estate plan, explains to his attorney that he is strongly opposed to being kept alive by artificial means. Given this, the attorney recommends that Kyle executes a:
Trevor would like to exchange some property he owns for a private annuity from his brother, Travis. Trevor’s attorney explains to him that, under recent regulations governing this arrangement, Trevor’s gain would: