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Because of the changing economy, your colleague, Fred, wants to return to doing bankruptcy work in the firm. You should caution Fred that the Bankruptcy Abuse Prevention and Consumer Protection Act changed decades of prior bankruptcy procedures effective:
Your colleague, Fred, is mastering the changes under the Bankruptcy Abuse Prevention and Consumer Protection Act. To save him some time, you might mention that despite many changes caused by this Act, bankruptcy continues to be made up of the same basic chapters. As a result, how many basic types of bankruptcy would you list for Fred?
You are being interviewed by your local newspaper for an article on bankruptcy. You mention that the Bankruptcy Code is made up of several chapters. Of these chapters, what are the three most commonly used to file bankruptcy?
Curt is insolvent and would like to be able to keep a few low-value assets such as carpentry tools he used as an independent contractor, his car, and his household furnishings. Curt therefore should file for:
At an in-house training seminar, the questions predominantly involve an individual’s ability to use Chapter 7. As a result, you should mention that in addition to individuals, Chapter 7 is also available to:
Henry’s printing business has accumulated debts that cannot be currently repaid. However, he believes that if he could just get a short reprieve from his creditors his business could recover. His advisor suggests a bankruptcy reorganization. When filing for such a bankruptcy, what chapter do most businesses use?
Learning of the available automatic stay, Tom has filed for bankruptcy to get relief from incessant creditor contact. For Tom, an automatic stay preventing collection efforts by creditors would begin:
Sunny has not heard from the IRS for several years but, is considering bankruptcy since she owes taxes. Her advisor explains that the IRS must assess a tax or begin collection action within three years. However, in what type of bankruptcy is this period suspended?
Shortly before filing for bankruptcy, Ted made payments to friends, family and selected creditors. Ted’s advisor warns that he may have to return such preferential payments on order of the bankruptcy court. However, which of the following payments escapes this preferential payment rule?
With the bankruptcy judge’s approval, Jose was able to secure a loan after filing bankruptcy. As a result, any claims made by this creditor should be categorized as:
In filing a Chapter 7 bankruptcy, Max created a separately taxable bankruptcy estate managed by, Alex, a bankruptcy trustee. What must Alex obtain for the bankruptcy estate to file any required income tax returns?
In filing a Chapter 7 bankruptcy, Max created a separately taxable bankruptcy estate managed by, Alex, a bankruptcy trustee. What must Alex obtain for the bankruptcy estate to file any required income tax returns?
Randy and Dave are in a failing partnership along with another partner, Gary, and want to file for Chapter 7 bankruptcy. What condition must be met for their partnership to file for such a bankruptcy?
Gerry wants to avoid the loss of his home, which would be a devastating blow to him and his family. Without filing bankruptcy, what would permit Gerry to protect all or a substantial portion of his home equity from current and future creditors?
Lee has sought statutory protection under his state’s homesteading provisions. Which of the following debts would most likely be covered under these provisions?
To satisfy the claims of his creditors, Wayne’s wages have been subjected to garnishment. However, under federal law, garnished wages cannot exceed the lesser of the amount by which Wayne’s disposable earnings exceed thirty times the minimum hourly wage, or:
Rob and Kate, who reside in Oxford, Mississippi, are filing for divorce. One of the negotiating points is who retains possession of their house. Since Mississippi is a strict common law state, possession of the house would likely be determined according to:
Tom and Linda, who reside in Hutchinson, Minnesota, have filed for divorce. Since Minnesota is an equitable distribution state, how would they divide their assets and earnings?
John and Molly are soon to be married and are discussing a possible premarital agreement. What can such an agreement alter or limit under the Uniform Premarital Agreement Act?
John has been married twice before and is insistent on a prenuptial agreement in his pending marriage to Molly. The probable reason for his insistence is that such an agreement can:
During a presentation to your firm, you mentioned that, prior to 1984, U.S. v. Davis controlled the tax treatment of a property settlement. How would you summarize the holding in this Supreme Court case?
Neil transferred some property to his former spouse, Yvonne. Under §1041, Neil is prevented from recognizing a gain or loss on this transfer, since the transfer was:
Under which of the following scenarios involving U.S. resident spouses can a taxable sale be deemed to occur under §1041?
Joe transferred some property to his spouse, Tia. A reason the transfer was deemed associated with a marital termination was that it was made in accordance with a:
Barry, who recently filed for divorce, transferred some property to his spouse which was held to be unrelated to the termination of the marriage. Barry’s attorney explains that he may be able to rebut this presumption if Barry can show that:
Pursuant to a divorce decree, James transferred property to a trust created by his former spouse. However, his tax advisor informs him that the transfer is not under §1041 and may be taxable since:
Jeff transferred some property to a third party lender to pay off the separate debts of his former spouse, Melinda. Jeff learns from his attorney that this transfer may receive special nonrecognition treatment under §1041 since:
Victor and Elizabeth, who reside in Arizona, a community property state, were recently divorced. Their settlement included the full transfer of §469 passive loss community property to Elizabeth. How would the special rule governing this type of transfer be applied to marital property in Arizona?
Carrie and Bob, who live in Oxnard, California, have filed for a divorce. In dividing their property, Bob wanted the court to consider the possible tax liabilities from a pending sale of his partnership interest. His attorney explains that the court likely would not take this into consideration based on California case law, in particular, the precedent set in:
In his divorce, Gary, received encumbered property from his spouse, Linea. All liabilities were assumed by Eric and his ex-spouse was relieved of related liability. Under §1041, how is this relief from liability treated?
In her divorce settlement, Jan’s spouse, Larry, is to transfer property to her. Larry should supply her with records sufficient to determine the adjusted basisand holding periodof the property. However, her attorney points out that tax regulations fail to provide sanctions for a transferor’s failure to comply with notice and recordkeeping rules. Therefore, he advises her that she should:
Debbie incurs interest on mortgage in acquiring full ownership of the marital residence in her divorce from her spouse, Mike. Under §163(h) and §56(e), she should characterize this interest as:
In her divorce, Kelly received the marital residence but, the home has a very low basis. However, her tax advisor informs her that, under §121, she may be provided relief from:
As part of their divorce, Sharon purchased some investment property from her spouse, Ken. One outcome of this purchase would be that:
In his divorce, Rick received some low basis rental property and now wants to use it in a §1031 exchange. To meet the §1031 completed transaction requirement for the acquisition property, Rick needs to receive it on the earlier of the 180th day after the date on which he transfers the property into the exchange or the:
The low basis property Rick received in his divorce has a short-term loan on it. However, Rick’s brother has a similar property with a long-term loan and is willing to exchange it. Rick’s tax advisor explains that §1031 treatment can apply to related party exchanges. However, under what circumstance will the §1031 treatment be later invalidated?
Everett meets with his attorney, Stuart, to discuss the critical issue of asset division in his divorce. Stuart shares the opinion expressed in the text and points out that frequently the asset with the most value in a divorce is:
Bill sold his primary personal residence within several months of purchasing it without satisfying either §121 two-year requirement. However, his advisor points out that Bill would likely qualify for a pro-rated §121 exclusion, since the failure to meet this requirement was due to:
The divorce between Harold and Maude involves a third party transfer of closely held corporate stock, which may qualify under §1041. Since Harold is the transferor, the consequence for him would be that:
Edna is concerned about stock that is to be transferred to her from a closely-held corporation pursuant to her divorce settlement. You point out that this concern is real, since in at least one case discussed in the text, the court held that when a wife received stock from a corporation, her redemption failed to qualify under §1041. In which case was this the outcome?
When Kathy and Darrell divorced, Kathy’s interest in the partnership was liquidated by the partnership and the partnership assumed her liabilities. Under §736, when a partnership assumes such liabilities, they would be treated as:
In her pending divorce, Jane is expected to receive the marital residence and custody of her minor child, Brendan. Her attorney explains that life insurance can be a useful tool in a divorce. In Jane’s case, what would such insurance most likely be used to protect?
Dolores received property in a §1041 interspousal property transfer incident to divorce from her spouse, Ralph. Three years later, she sold the property. This sale would be treated as:
At an in-house firm presentation, you explain that a qualified domestic relations order (QDRO) can be used to divide retirement benefits for divorce or separation purposes. Which of the following items should you state must be included in a QDRO?
Gretchen recently received a distribution from a qualified domestic relations order (QDRO) created in her divorce settlement. As a QDRO payee, Gretchen would be taxed:
After his divorce, Lee was laid off and is now a self-employed consultant. Late this year, he established an IRA. If the amount is less than the annual dollar limit, up to what amount can Lee deduct for contribution purposes?
Jan’s divorce requires her spouse, Jon, to make a distribution from his employee benefit plan to her. As a non-participant in the plan, she has meet certain requirements to roll the distribution over tax-free into an IRA. What is one of these requirements?
Frances divorced her spouse, a retired career U.S. Army officer, who has been married twice before. As part of the divorce settlement, the military may make direct payments to her from her spouse’s military pension. However, her attorney points out that a limitation of such a payment would be that: