CANNON 1 - EXAM QUESTIONS
which-is-normally-indicated-when-GNP-has-decreased-for-two-consecutive-quarters?---
ans-✔✔recession
the-opportunity-to-buy-unissued-common-stock-at-a-specified-price,-over-a-long-period-of-
time,-is-provided-to-the-holder-of-a:---ans-✔✔warrant
which-of-the-following-allows-shareholders-to-purchase-additional-stock-before-the-
company-offers-shares-to-the-general-public?---ans-✔✔pre-emptive-right
alfread,-a-divorcee,-dies-with-a-valid-will-leaving-'my-entire-estate-to-my-issue,-per-stirpes-
with-the-right-of-representation-in-each-generation.'-he-is-survived-by-his-father-F,-two-
grandchildren-A-and-B-by-his-deceased-daughter,-and-one-grandchild-C-by-his-deceased-
son.-which-of-the-following-represents-the-APPROPRIATE-distribution?---ans-✔✔C-
receives-more-than-A-or-B
Dr.-Jones-purchases-a-$5,000,000-life-insurance-policy.-on-the-advice-of-her-attorney,-
she-transfers-all-incidents-of-ownership-in-the-policy-to-an-irrevocable-trust-for-the-benefit-
of-her-children-the-following-year.-Dr.-Jones-dies-two-years-later,-and-the-insurance-
proceeds-are-paid-to-the-trust.-What-are-the-estate-tax-consequences-to-Dr.-Jones'-
estate?---ans-✔✔Insurance-proceeds-are-included-in-her-estate
medical-expenses-for-a-decedent-may-be-deduced-on-which-of-the-following-returns---ans-
✔✔either-a-706-or-1040
a-client-dies.-after-prepartion-of-the-decedent's-final-1040-income-tax-return,-you-notice-
that-the-client-has-an-unused-charitable-contribution-carry-forward-of-$10,000.-Which-of-
the-following-best-describes-the-status-of-this-deduction-for-future-use?---ans-✔✔it-is-lost
which-of-the-following-most-accurately-represents-the-income-taxation-of-an-irrevocable-
complex-trust?---ans-✔✔income-retained-by-the-trust-is-taxed-to-the-trust;-income-
distributed-to-beneficiaries-in-the-same-tax-year-earned-is-taxed-to-the-beneficiaries
one-of-your-bank's-largest-depositors-tells-you-that-he-does-not-trust-lawyers,-and-asks-
you-to-prepare-a-simple-will-for-him,-leaving-everything-to-his-wife.-You-should-tell-him-
that---ans-✔✔you-cannot-prepare-his-will-because-to-do-so-constitutes-the-unauthorized-
practice-of-law
which-is-normally-indicated-when-GNP-has-decreased-for-two-consecutive-quarters?---
ans-✔✔recession
the-opportunity-to-buy-unissued-common-stock-at-a-specified-price,-over-a-long-period-of-
time,-is-provided-to-the-holder-of-a:---ans-✔✔warrant
which-of-the-following-allows-shareholders-to-purchase-additional-stock-before-the-
company-offers-shares-to-the-general-public?---ans-✔✔pre-emptive-right
alfread,-a-divorcee,-dies-with-a-valid-will-leaving-'my-entire-estate-to-my-issue,-per-stirpes-
with-the-right-of-representation-in-each-generation.'-he-is-survived-by-his-father-F,-two-
grandchildren-A-and-B-by-his-deceased-daughter,-and-one-grandchild-C-by-his-deceased-
son.-which-of-the-following-represents-the-APPROPRIATE-distribution?---ans-✔✔C-
receives-more-than-A-or-B
Dr.-Jones-purchases-a-$5,000,000-life-insurance-policy.-on-the-advice-of-her-attorney,-
she-transfers-all-incidents-of-ownership-in-the-policy-to-an-irrevocable-trust-for-the-benefit-
of-her-children-the-following-year.-Dr.-Jones-dies-two-years-later,-and-the-insurance-
proceeds-are-paid-to-the-trust.-What-are-the-estate-tax-consequences-to-Dr.-Jones'-
estate?---ans-✔✔Insurance-proceeds-are-included-in-her-estate
medical-expenses-for-a-decedent-may-be-deduced-on-which-of-the-following-returns---ans-
✔✔either-a-706-or-1040
a-client-dies.-after-prepartion-of-the-decedent's-final-1040-income-tax-return,-you-notice-
that-the-client-has-an-unused-charitable-contribution-carry-forward-of-$10,000.-Which-of-
the-following-best-describes-the-status-of-this-deduction-for-future-use?---ans-✔✔it-is-lost
which-of-the-following-most-accurately-represents-the-income-taxation-of-an-irrevocable-
complex-trust?---ans-✔✔income-retained-by-the-trust-is-taxed-to-the-trust;-income-
distributed-to-beneficiaries-in-the-same-tax-year-earned-is-taxed-to-the-beneficiaries
one-of-your-bank's-largest-depositors-tells-you-that-he-does-not-trust-lawyers,-and-asks-
you-to-prepare-a-simple-will-for-him,-leaving-everything-to-his-wife.-You-should-tell-him-
that---ans-✔✔you-cannot-prepare-his-will-because-to-do-so-constitutes-the-unauthorized-
practice-of-law
