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CANNON CTFA PREP BRAND NEW
ACTUAL EXAM WITH ANSWERS.
Which of the following clauses would MOST LIKELY be
considered a general power of appointment?
A. Pay for support, education and medical expenses in whatever
amounts needed at the trustee's discretion.
B. Pay my children for their support in their accustomed manner
of living.
C. Pay my children for their comfort, welfare and happiness.
D. Pay my children for health, education, support or maintenance.
- correct answer -C. Pay my children for their comfort, welfare and
happiness.
The required beginning date for a traditional IRA owner who was
born August 10, 1948, is:
A. April 1, 2018
B. April 15, 2019
C. April 1, 2020
D. April 15, 2020 - correct answer -C. April 1, 2020
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Tom Jones set up an irrevocable trust into which he transferred a
piece of rental property, reserving the right to receive the income
from it for the rest of his life. After his death, accumulated income
and principal will go to his son, Steve. Which of the following is a
gift tax implication of the transfer of trust?
A. There is no gift tax because the gift is one of a future interest.
B. There is a gift tax because the transfer of the irrevocable
remainder interest in trust to Steve is a taxable transfer.
C. There is no gift tax because there has not been a completed
gift.
D. There is a gift tax because the transfer of the accumulated
income to Steve when the trust terminated is a completed gift. -
correct answer -B. There is a gift tax because the transfer of the
irrevocable remainder interest in trust to Steve is a taxable
transfer.
A trust is a skip person if:
A. At least one current beneficiary is a skip person
B. All current beneficiaries are skip persons
C. Never
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D. Always - correct answer -B. All current beneficiaries are skip
persons
Inclusion Ratio - correct answer -1 - (Exemption allocated / net
amount funded)
Goal is to ALWAYS create inclusion ratios of 0 and 1 (0 = GSTT
Exempt and 1 = Fully Taxable)
Applicable Rate - correct answer -= Inclusion Ratio x Tax Rate
(40%)
Indicate which of these bonds are taxable at the State level and
which are taxable at the Federal level
I. Corporate bonds
II. Government bonds
III. Out of state municipal bonds
IV. In state municipal bonds - correct answer -Corp - Federal &
State
Government - Federal only
In state municipal bonds - Neither
Out of state municipal bonds - State only
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Alternate valuation date must be elected on the first estate tax
return. Alternate valuation is only allowed if:
I. Increases the value of the gross estate
II. Decreases the value of the gross estate
III. Decreases the sum of the estate tax and GSTT
IV. Applied to all of the property
V. Applied to some of the property
A. I and IV
B. II, III, and IV
C. II, III, and V
D. I and V - correct answer -B. II, III, and IV
Government's (Congress & President) use of taxes and spending
to achieve economic and social goals - correct answer -Fiscal
policy
The Federal Reserve alters the money supply, interest rates,
reserves, and margin borrowing rate in an attempt to affect the
economy. - correct answer -Monetary Policy
CANNON CTFA PREP BRAND NEW
ACTUAL EXAM WITH ANSWERS.
Which of the following clauses would MOST LIKELY be
considered a general power of appointment?
A. Pay for support, education and medical expenses in whatever
amounts needed at the trustee's discretion.
B. Pay my children for their support in their accustomed manner
of living.
C. Pay my children for their comfort, welfare and happiness.
D. Pay my children for health, education, support or maintenance.
- correct answer -C. Pay my children for their comfort, welfare and
happiness.
The required beginning date for a traditional IRA owner who was
born August 10, 1948, is:
A. April 1, 2018
B. April 15, 2019
C. April 1, 2020
D. April 15, 2020 - correct answer -C. April 1, 2020
, Page | 2
Tom Jones set up an irrevocable trust into which he transferred a
piece of rental property, reserving the right to receive the income
from it for the rest of his life. After his death, accumulated income
and principal will go to his son, Steve. Which of the following is a
gift tax implication of the transfer of trust?
A. There is no gift tax because the gift is one of a future interest.
B. There is a gift tax because the transfer of the irrevocable
remainder interest in trust to Steve is a taxable transfer.
C. There is no gift tax because there has not been a completed
gift.
D. There is a gift tax because the transfer of the accumulated
income to Steve when the trust terminated is a completed gift. -
correct answer -B. There is a gift tax because the transfer of the
irrevocable remainder interest in trust to Steve is a taxable
transfer.
A trust is a skip person if:
A. At least one current beneficiary is a skip person
B. All current beneficiaries are skip persons
C. Never
, Page | 3
D. Always - correct answer -B. All current beneficiaries are skip
persons
Inclusion Ratio - correct answer -1 - (Exemption allocated / net
amount funded)
Goal is to ALWAYS create inclusion ratios of 0 and 1 (0 = GSTT
Exempt and 1 = Fully Taxable)
Applicable Rate - correct answer -= Inclusion Ratio x Tax Rate
(40%)
Indicate which of these bonds are taxable at the State level and
which are taxable at the Federal level
I. Corporate bonds
II. Government bonds
III. Out of state municipal bonds
IV. In state municipal bonds - correct answer -Corp - Federal &
State
Government - Federal only
In state municipal bonds - Neither
Out of state municipal bonds - State only
, Page | 4
Alternate valuation date must be elected on the first estate tax
return. Alternate valuation is only allowed if:
I. Increases the value of the gross estate
II. Decreases the value of the gross estate
III. Decreases the sum of the estate tax and GSTT
IV. Applied to all of the property
V. Applied to some of the property
A. I and IV
B. II, III, and IV
C. II, III, and V
D. I and V - correct answer -B. II, III, and IV
Government's (Congress & President) use of taxes and spending
to achieve economic and social goals - correct answer -Fiscal
policy
The Federal Reserve alters the money supply, interest rates,
reserves, and margin borrowing rate in an attempt to affect the
economy. - correct answer -Monetary Policy
