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Arnold is planning to retire from his aerospace engineering job when he turns 62. According to the author’s planning estimate, he should realistically plan for a retirement period lasting until he is:
In discussing retirement planning with Jim and Barbara, Jim feels they should devote more effort to money management. You agree and explain that the habit of money management will allow them to:
Barbara asks if there is any retirement or tax benefit to holding assets in a particular format. You explain that there are nine basic ways to hold title. Starting with the most straightforward approach to possessing property, you would open your discussion with:
Carmen and her business associates are considering a corporation for their design business. Their attorney explains that a corporation would offer the advantages of centralized management, limited liability, and:
Jane has a jewelry business and would like to know if incorporating would provide more retirement planning opportunities since corporations can establish qualified retirement plans and fringe benefit programs. Her advisor should point out that such plans and programs are:
Sylvia meets with her advisor to inquire about using a business trust to conduct and operate a business. The advisor should point out to Sylvia that certain business trusts can be taxed like:
Tom is planning for retirement by investing in small parcels of local real estate with other family members and would like to know under what circumstances a joint tenancy would be advantageous. You should explain to him that it would be advantageous when:
During your meeting with Tom, you also discuss with him how tenants-in-common is another form of co-tenancy. Tom wants to know what the main difference is between them tenants-in-common and joint tenancy. You should point out that, unlike joint tenancy, tenants-in-common interests can be held:
When George met with his planning advisor, he asked how much of his current income he would need to live in retirement. His advisor cited a comprehensive retirement study conducted by Georgia State University, and explained that, according to the study, the percentage of his current income he would likely need would be:
Your client, Albert, is middle-aged but still meets with you to discuss retirement savings. He would like to know how much of his income he should put into saving for retirement. You recommend that he save at least:
Richard wants to build wealth and meets with you to find out what is involved in developing such a plan. If you shared the author’s view, you would point out to Richard that an investment plan should involve a dynamic relationship among:
Ralph and Angie meet with you to improve their money management so they can build their wealth. You begin by pointing out that the three goals of money management would be to increase discretionary income, to decrease expenses, and to:
To help your staff better understand tax planning, your in-house presentation has divided income into four types: taxable, tax-free, tax-deferred, and tax-sheltered. Under this categorization, what type of income would include wages, salaries, commissions, rents, interest, and dividends?
Charlie wants to deduct some real estate depreciation losses for the most recent tax year. However, his tax advisor explains that the §469 passive loss rules limit the deduction of such passive activity losses to:
You own stock in a publicly traded corporation. An issue you raise when you meet with your accountant is when corporate dividend payments are reported. Your accountant should explain that corporations are required to report such payments that exceed:
During a seminar you are presenting on business entities, you state that fewer fringe benefits are available to S corporations and partnerships. A participant asks what other type of business entity is similarly limited. You should reply:
Maria is working out an overall investment plan in order to save for retirement. Since she wants to use legal tax deferral as part of this plan, she should consider investing in a(n):
You are meeting with one of your tax planning clients, Tony. He asks how child support and personal injury awards should be thought from a tax point of view. You would reply that these should be considered:
Travis is meeting with his advisor and lists several items and would like to know which of them would be tax-free if he paid for the insurance, but taxable if his employer paid. His advisor should inform him that, of the items he listed, it would be:
Molly and John are creating a budget in order to better manage their finances, which, they hope, will result in net cash. One of the ways they would want to use the net cash would be for:
Deidre is creating a financial plan that will allow her to more effectively build wealth. In developing this plan, she should think of savings primarily as a means to:
In developing her financial plan, one strategy Deidre wants to utilize in choosing among investments is to focus on those with the most tax advantages. Such a tax-favored investment would include:
Shane would like to develop a financial management strategy that utilizes the time value of a deduction. What would happen if Shane decided to adopt a plan to accelerate her deductions?
Albert is slow to take measures to save and build wealth. Which barriers to accomplishing this should he be particularly mindful of?
To determine his asset inventory, Albert must place values on personal property. In assigning such values, he would need to treat the property as if:
Of the following assets that Albert claims, which of the following assets are most likely to grow in value over time?
Brianna wants to hire a planner to completely manage her finances. Her friend, Jon, strongly advises her to take an active part in her financial decisions and argues that complete delegation of financial responsibilities is irresponsible. Why would Jon offer this advice?
When Brianna meets with her planner, he notes that her individual financial plan can be organized using four basic tax-planning strategies. These would include deferral, reduction, splitting, and:
Jose wishes to diversify his real estate holdings and meets with his advisor who explains that like-kind exchanges have several advantages over pure sales. For example, his advisor points out that exchanging can allow a property owner to build equity rather than reduce it through
Mike wants to dispose of some real estate and you suggest he try a §1031 exchange. Mike wants to know what type of transaction this is and you reply that one way to explain it is that it is antithetical to a:
Mike has found someone to purchase his property but he has not been unable to locate exchange replacement property. You suggest that he use a delayed exchange since it would help him by:
Sarah is contemplating a §1031 exchange with her brother, John, and meets with her advisor who explains that §1031 treatment can apply to related parties. However, the advisor should also point out that the exchange would be invalidated and the postponed gain would be taxable if:
During a seminar, you are discussing personal property exchanges. A participant names several pairs of personal properties and asks which could be exchanged under §1031. You should reply that:
An escrow officer has recommended that Sam use an intermediary in his pending like-kind exchange. Sam’s tax advisor explains that, from a basic functional standpoint, a qualified intermediary is:
Frances would like to exchange a partnership interest under §1031 like her father previously did years ago. However, her tax advisor explains that ever since the Tax Reform Act of 1984 partnership interests:
Don owns a small engineering consulting firm and would like to offer a pension plan to his employees where the amounts of employee retirement benefits are variable. In this case, he would want to offer a
After watching a financial planning presentation on public television, Sharon would like to open a Roth IRA. You would explain to her that this type of IRA is a distinctive individual retirement plan that individuals can establish and that one of its characteristics is that:
Edward has decided to plan for his retirement using a deferred annuity. However, his advisor points out that these annuities are most beneficial for those who are incapable of:
Thomas took out a loan from his company’s retirement plan. However, when he filed his tax returns, he learned he would be charged an excise tax on the loan because he failed to meet all §4975 requirements. The reason for this would be that:
Andre sold some property for installment payments over a period of 18 months. Under §453, Andre could realize substantial tax savings since he would pay taxes on the property disposition as:
Andrea wants to take a loss deduction after selling some property but, finds that §465 applies to the property. As a result, her loss deduction would be limited to:
June has the opportunity to use a nonrecourse loan in financing the purchase of some property out of town. Under §465, for her loan to be qualified nonrecourse financing, June would need to make sure that she obtains the loan from:
Greg is in a high tax bracket and wants to explore any available simple tax-deferment opportunities. His tax advisor suggests that, under §1234, Greg could obtain the tax-free use of funds for a few years through the use of:
Greg has lost interest in tax-deferment strategies and craves immediate tax relief. This tax advisor points out to Greg that he is eligible for tax credits, which would immediately help him out, since they would:
John operates a business and wants to hire more employees using the work opportunity credit to reduce his costs. His advisor explains that, to get the §51 work opportunity credit, a new worker must be certified by a designated local agency as being: