Reorganization is a non taxable exchange
Which of the following is false regarding annuities?
They are misleading, as they do not adjust for inflation
Premiums that you pay will equal your basis, so this part is recovered tax-free
Annuities are more beneficial for the buyers than for the insurance company
If you pay $400k in annuity premiums, but you'll live long enough to use 720k worth, how much of each dollar of annuity payment must you pay tax on?
400/720
720/400
Which of the following is not a characteristic of US EE savings bonds?
You pay for half
They accrue interest, on which you continually pay tax
All accrued interest is taxable at once
They stop paying interest after 30 years
Only net profit (rents minus operating and maintenance expenses) are included in the AGI of an owner of rental real estate.
Which of the following is true about rental real estate?
Rental real estate is a 1231 asset
Buildings are depreciated using MACRS with either 27.5 or 39 year recover periods
Depreciation allows owners to recover their investments in buildings
Rental real estate is never subject to Medicare contribution tax
A passive activity occurs when someone owns interest in a business and materially participates in the business, but they are not concerned about whether they make a profit.
Which of the following people would definitely be able to take a deduction of $5k for their passive activity loss?
Sandra had a regular business loss of $10k in the same year.
Billy had a regular business loss of $4k in that same year and no passive activity income
Lola had $5k of passive activity income
Hotels do not count as passive activity rental properties.
Whom of the following would be eligible for the special $25k passive activity loss deduction?
Nancy, who makes $150k/year
Zach, who makes $600k/year
Which of the following is an acceptable way to "cut one's losses" from a passive activity?
Get out the business and sell
Get involved in another passive activity, make a profit,and deduct the passive loss from your previous activity
Jill is single and has a net investment income of $125k and an AGI of $300k. How much will her income Medicare contribution tax be?
$4,651, or 3.8% of her net investment income
$11,400, or 3.8% of her AGI.
$3,800, or 3.8% of the excess of her AGI over the threshold of $200k
There are four basic kinds of transfer taxes.
A person has to be alive to transfer something subject to gift tax.
Which of the following gifts are not taxable?
Denny gives his convertible to his wife, friend Morton.
Felicia pays for her niece's chemotherapy treatments.
Wally gives loses his prize race horse in a bet.
Which of the following are eligible for a tax exclusion (given that none of the following people are related or married?
Tim gives Theresa a diamond ring worth $6k
Kimberly gives Kate a set of pots worth $300
Dana gives Lorraine a cooking lesson and pays for $30 of groceries
Lorraine gives Kyle plane tickets worth $20k so he can travel the world
You don't actually pay the tax on gift items until the lifetime transfer tax exclusion is reached. This is $5M, indexed each year for inflation. After this threshold is reached, the tax rate is 40%
Which of the following estates won't have to pay tax?
Betty leaves all her money to her son Tim
Ramona leaves all her money to her husband Levi
Janelle leaves all her money to Boys and Girls Club
Tom leaves all his money to his mistress Crystal
If Karla inherits a house worth $1M from her mother Bella, she will have to include it in her income for that year.
