CANNON CTFA ACTUAL TEST QUESTIONS
WITH COMPLETE ANSWER KEY
●● A simple trust earned $27,000 in dividends. It paid $4,000 in trustee
fees, one-half
from income and one-half from principal. Trust accounting income is
which of the following?
- $0
- $23,000
- $25,000
- $27,000
Answer: $25,000
●● If the Trust Document is silent with respect to a certain cash
transaction, the Trust Administrator should first look to which of the
following for guidance?
- Court of Jurisdiction
- Principal and Income Law of the State
- Grantor
- OCC
Answer: Principal and Income Law of the State
,●● When determining a long-term sustainable rate of return for a
unitrust payout, which of the following best represents the range of high
confidence payout percentages?
- 1-2%
- 2-3%
- 3-5%
- 120% of the federal midterm rate
Answer: 3-5%
●● Which of the following is an example of tangible personal property?
- Gold bar
- Common stock certificate
- Patent
- Vacant land
Answer: Gold bar
●● Which of the following is an example of tangible personal property?
- Family residence
- IBM stock
- Jewelry
- Rental house
Answer: Jewelry
,●● A to B for life, then to C. Following this transfer, which of the
following is true?
- A has a fee simple interest.
- B has a reversionary interest.
- C has a remainder interest.
- C has a life estate.
Answer: C has a remainder interest.
●● Under joint tenants with rights of survivorship, when one tenant dies
which of the following best describes the result?
- Her share passes through her will to her heirs.
- Her share passes by law to her heirs, not through her will.
- Her share passes to the surviving joint tenant regardless of what her
will says.
- The asset must be sold and the estate gets 1/2 of the proceeds.
Answer: Her share passes to the surviving joint tenant regardless of what
her will says.
●● A decedent owns $400,000 in his own name, a $200,000 home in
joint tenancy with his spouse and a $100,000 life insurance policy with
the children as beneficiaries. Which of the following is the amount
passing through probate?
- 0.
, - $400,000.
- $500,000.
- $700,000.
Answer: $400,000
●● In cutting down a tree, which of the following occurs?
- Real property is converted to personal property.
- Personal property is converted to real property.
- Real property is converted to a fixture.
- There is no conversion, the tree remains real property.
Answer: Real property is converted to personal property.
●● Which of the following transfers are includable in the gross estate of
the donor if made within 3 years of death?
- Gift of $8,000 cash value life insurance policy to son.
- Gift of $9,800 cash to daughter.
- Gift of $10,000 cash to friend.
- Gift of $5,000 stock in a closely held company to parent.
Answer: Gift of $8,000 cash value life insurance policy to son.
●● Which of the following can be deducted either on the decedent's final
1040 income tax return or on the Form 706 Estate Tax return?
- Funeral expenses.
WITH COMPLETE ANSWER KEY
●● A simple trust earned $27,000 in dividends. It paid $4,000 in trustee
fees, one-half
from income and one-half from principal. Trust accounting income is
which of the following?
- $0
- $23,000
- $25,000
- $27,000
Answer: $25,000
●● If the Trust Document is silent with respect to a certain cash
transaction, the Trust Administrator should first look to which of the
following for guidance?
- Court of Jurisdiction
- Principal and Income Law of the State
- Grantor
- OCC
Answer: Principal and Income Law of the State
,●● When determining a long-term sustainable rate of return for a
unitrust payout, which of the following best represents the range of high
confidence payout percentages?
- 1-2%
- 2-3%
- 3-5%
- 120% of the federal midterm rate
Answer: 3-5%
●● Which of the following is an example of tangible personal property?
- Gold bar
- Common stock certificate
- Patent
- Vacant land
Answer: Gold bar
●● Which of the following is an example of tangible personal property?
- Family residence
- IBM stock
- Jewelry
- Rental house
Answer: Jewelry
,●● A to B for life, then to C. Following this transfer, which of the
following is true?
- A has a fee simple interest.
- B has a reversionary interest.
- C has a remainder interest.
- C has a life estate.
Answer: C has a remainder interest.
●● Under joint tenants with rights of survivorship, when one tenant dies
which of the following best describes the result?
- Her share passes through her will to her heirs.
- Her share passes by law to her heirs, not through her will.
- Her share passes to the surviving joint tenant regardless of what her
will says.
- The asset must be sold and the estate gets 1/2 of the proceeds.
Answer: Her share passes to the surviving joint tenant regardless of what
her will says.
●● A decedent owns $400,000 in his own name, a $200,000 home in
joint tenancy with his spouse and a $100,000 life insurance policy with
the children as beneficiaries. Which of the following is the amount
passing through probate?
- 0.
, - $400,000.
- $500,000.
- $700,000.
Answer: $400,000
●● In cutting down a tree, which of the following occurs?
- Real property is converted to personal property.
- Personal property is converted to real property.
- Real property is converted to a fixture.
- There is no conversion, the tree remains real property.
Answer: Real property is converted to personal property.
●● Which of the following transfers are includable in the gross estate of
the donor if made within 3 years of death?
- Gift of $8,000 cash value life insurance policy to son.
- Gift of $9,800 cash to daughter.
- Gift of $10,000 cash to friend.
- Gift of $5,000 stock in a closely held company to parent.
Answer: Gift of $8,000 cash value life insurance policy to son.
●● Which of the following can be deducted either on the decedent's final
1040 income tax return or on the Form 706 Estate Tax return?
- Funeral expenses.
