CRPC SAMPLE TESTS QUESTIONS AND ANSWERS

CRPC SAMPLE TESTS QUESTIONS
AND ANSWERS

Giftjcsplittingjc-jcanswer--
Allowsjcajcmarriedjccouplejctojcdoublejctheirjcallowablejcannualjcexclusionsjcisjconlyjcallowe
djcforjcmarriedjccouples

Ownershipjclimitedjctojcspousesjconlyjc-jcanswer--
Jointjctenancyjctenancyjcbyjcthejcentiretyjccommunityjcproperty

GrantorjcretainedjcinterestjcTrustjcGritjc-jcanswer--
Grantorjccanjcreceivejcalljcincomejcearnedjcbyjcthejctrust

QualifiedjcterminablejcinterestjcPropertyjcTrustjcQ-tipjc-jcanswer--IncomejcofjcajcQ-
tipjcgoesjctojcthejcgrantor'sjcspouse

CharitablejcleadjcTrustjcCLTjc-jcanswer--Thejcincomejcgoesjctojccharity

PowerjcofjcappointmentjctrustjcPOAjc-jcanswer--Incomejcgoesjctojcthejcgrantor'sjcspouse

Valuationjcdatejcforjcgiftsjc-jcanswer--Thejcdatejconjcwhichjcthejctransferjcisjccompleted

Grossjcestatejc-jcanswer--
Includesjcalljcthejcpropertyjcthatjcisjcsubjectjctojcthejcfederaljcestatejctaxjcwhetherjcorjcnotjcow
nedjcbyjcthejcdecedentjcandjcwhetherjcorjcnotjcincludedjcinjcthejcthejcprobatejcorjctaxablejcest
ate

Taxationjcofjcreinvestmentjcofjcordinaryjcdividendsjc-jcanswer--
Qualifiedjcdividendsjcarejcsubjectjctojcthejcsamejctaxjcratesjcapplicablejctojclong-
termjccapitaljcgains

Thejcbasisjcforjccharitablejccontributionjcdeductionjcforjcstockjc-jcanswer--
Basedjconjcthejccurrentjcfairjcmarketjcvaluejcofjcthejcstock

Taxationjcofjcsubstitutejcpaymentsjcinjclieujcofjcajcdividendjc-jcanswer--
Substitutejcpaymentsjcinjclieujcofjcajcdividendjcarejcnotjcsubjectjctojcpreferentialjctreatmentjca
ndjcarejctreatedjcasjcordinaryjcincome

Howjcdoesjcajcstockjcdividendjcaffectjcbasisjc-jcanswer--
Thejcbasisjcisjcreducedjctojcprovidejcbasisjcforjcsharesjcarejcreceivedjcasjcajcstockjcdividend

Netjccapitaljclossjcamountjc-jcanswer--$3,000jcperjcyearjcarejcdeductible

Taxationjcofjcqualifiedjcdividendsjc-jcanswer--
Dividendsjcarejctaxedjcatjc15%jcorjc20%jcifjcthejcdividendsjcfalljcintojcthejc39.6%jcbracket

,Textjctreatmentjcforjcajcshareholderjcparticipatingjcinjccommonjcstockjcdividendjcreinvestm
entjcprogramjc-jcanswer--
Thejcshareholderjcisjctreatedjcasjcifjchejcreceivedjcajccashjcdividendjcequaljctojcthejcfairjcmark
etjcvaluejcofjcthejcsharesjcpurchasedjcunderjcthejcplan

Whenjcisjcearnedjcincomejctaxedjc-jcanswer--
Itjcisjctaxedjcinjcthejcyearjcwhenjcthejccheckjcwasjcreceived

MedicaljcexpensesjcandjcAMTjc-jcanswer--
MostjcthatjcarejcdeductedjcarejcallowedjcforjcAMTjcpurposesjc10%jcofjcAGI

BargainjcelementjconjcexercisejcofjcanjcincentivejcstockjcoptionjcandjcAMTjc-jcanswer--
IncludedjcasjcajcpreferencejcitemjcforjcAMT

PrivatejcactivityjcmunicipaljcbondsjcandjcAMTjc-jcanswer--
InterestjcfromjcprivatejcactivityjcMunijcbondsjcisjcanjcAMTjcpreferencejcitemjcexceptjcforjcbon
dsjcissuedjcinjc2009jcandjc2010

HomejcmortgagejcinterestjcandjcAMTjc-jcanswer--
HomejcmortgagejcinterestjcisjcallowedjcforjcregularjcandjcAMT

Adjustedjcgrossjcincomejc-jcanswer--
Incomejcremainingjcafterjcsubtractingjcthejcadjustmentsjctojcincome

DomesticjcPartnersjctransferjcwealthjctojcthejcotherjcvsjclegaljcspousejc-jcanswer--
Governorjcdomesticjcpartnerjccannotjctakejcajcmaritaljcdeductionjcinjcexcessjcofjcthejcgiftjcta
xjcannualjcexclusionjcforjcthejctransferjcwhilejcajcdonorjcspousejccould

IfjcajcdomesticjcpartnerjcisjcappointedjcasjcconservatorjcorjcGuardianjc-jcanswer--
Thejcindividualjcshouldjcmakejchisjcorjcherjcdesirejctojchavejcthejcdomesticjcpartnerjcappoint
edjcbyjcexecutingjcwrittenjcdocumentsjcapprovedjcbyjcstatejclawjcasjcintestacyjclawsjctypicall
yjcfollowjcthejcbloodline

Perjcyearjc4jcretirementjcbenefitjcincreasejcoverjcfulljcretirementjcagejc-jcanswer--8%

Qlacjc-jcanswer--
Suitablejcforjcthosejcwhojcarejchealthyjcandjchavejcajcfamilyjchistoryjcofjclongevityjcandjcthos
ejcenteringjcretirementjcwithjcSocialjcSecurityjcasjctheirjconlyjcsourcejcofjcguaranteedjcincom
e

Bucketjcapproachjctojcwithdrawalsjcfromjcretirementjcsavingsjc-jcanswer--...

ProperjcwrittenjcFinancialjcgoaljc-jcanswer--
Specificjcinjctermsjcofjcgoldjcdollarjcamountjcandjctimejcframe

Incomejcreplacementjcpercentagesjc-jcanswer--
Incomejcreplacementjcpercentagesjcvaryjcbetweenjclow-incomejcandjchigh-
incomejcretirees.jcIncomejcreplacementjcratiosjcshouldjcnotjcbejcusedjcasjcthejconlyjcbasisjcf

,orjcplanning.jcArejcusefuljcforjcyoungerjcclientsjcasjcajcguidejctojctheirjclong-
termjcplanningjcandjcinvesting.

Investmentjcpolicyjcattributesjc-jcanswer--Long-
termjcperspective.jcRealistic.jcClearlyjcdefined.

Assetjcallocationjcstrategiesjc-jcanswer--Tactical.jcCorejcsatellite.jcStrategic

Correlationjcandjcdiversificationjc-jcanswer--
Thejclowestjccorrelationjcprovidesjcthejcmostjcdiversification

TwojcmajorjcrisksjcassociatedjcwithjcCommonjcStocksjc-jcanswer--
Marketjcriskjcandjcbusinessjcrisk

TwojcmajorjcrisksjcassociatedjcwithjcBondjcinvestingjc-jcanswer--
Interestjcratejcriskjcandjcpurchasingjcpowerjcrisk

Calculatingjcyieldjctojcmaturityjconjcthejccalculatorjc-jcanswer--Setjcthejcendjcmode

Allowablejcearningsjclimitjcforjc2015jcforjcnojcreductionjcinjcSocialjcSecurityjcbenefitsjc-
jcanswer--$15,720jcearnedjcincome



SocialjcSecurityjcbenefitsjcavailablejcwhenjcfullyjcinsuredjcworkerjcbeginsjcatjcfulljcretiremen
tjcagejc-jcanswer--
Atjcfulljcretirementjcagejcthejcworkersjcspousejcwilljcreceivejcatjcleastjc50%jcofjcthejcworkersjc
PIA.jcCapitulojc4jcretirementjcagejcthejcPIAAjcisjcreducedjcbyjc25/36jcofjc1%jcforjceachjcofjcthe
jcfirstjc36jcmonthsjcthejcspousejcisjcunderjcfulljcretirementjcage



Howjcdoesjctax-exemptjcinterestjcaffectjcsocialjcsecurityjctaxationjc-jcanswer--Alljctax-
exemptjcincomejcisjcincludedjctojcdeterminejcajcsocialjcsecurityjctaxationjcajcmaximumjcofjc8
5%jcofjcSocialjcSecurityjcbenefitsjcarejcsubject

Featuresjcofjcdefinedjcbenefitjcplansjc-jcanswer--
Writejcajcpredeterminedjcfixjcretirementjcbenefitjcforjcparticipatingjcemployees

DojcTargetjcbenefitjcplansjcofferjcSurvivorjcannuityjcbenefitsjctojcmarriedjcparticipantsjc-
jcanswer--

QualifiedjcPensionjcPlanjcsuchjcasjcTargetjcbenefitjcplansjcarejcrequiredjctojcofferjcSurvivorjc
annuityjcbenefitsjctojcmarriedjcparticipantsjcqualifiedjcprofitjcsharingjcplansjcincludingjcstock
jcbonusjcplansjcandjcAesop'sjcgenerallyjcarejcnotjcsubjectjctojcthejcSurvivorjcannuityjcrequire

mentsjcbutjcmorejctypicallyjcofferjclumpjcsumjcpayouts

Describejcanjcinjclieujcofjcplanjc-jcanswer--
AjcpurejcDeferredjcCompensationjcPlanjcisjcsometimesjccalledjcinjclieujcofjcplanjcbecausejcth
ejcemployeejcisjcreceivingjcthejcemployer'sjcpromisejctojcpayjcbenefitsjcinjclieujcofjccurrentjcin
come.jcdeathjcbenefitjcplansjcprovidejcnojclifejctimejcbenefitsjctojcthejcemployeejcparticipantjc
thejcemployerjchelpsjctojcfundjcthejcretirementjcbenefitjcprovidedjcbyjcajcsupplementaljcplan.
jcsomejcDeferredjcCompensationjcPlanjcprovidejcadditionaljcbenefitsjcsuchjcasjcbenefitsjcfo

rjcdisability

, Similarityjcbetweenjcqualifiedjcandjcnon-qualifiedjcplansjc-jcanswer--
Theyjcmustjcenablejcthejcemployeejctojcdeferjctaxationjconjcthejcplanjcfundsjcuntiljcretiremen
t

Whatjccanjcaffectjcthejcretirementjcbenefitsjcinjcajcdefinedjccontributionjcplanjc-jcanswer--
Thejcactualjcinvestmentjcreturns.jcThejcvaluejcofjcthejcparticipantsjcindividualjcaccountjcbal
ancejcatjcretirement

Whichjcallocationsjcarejcpermittedjcinjcajcqualifiedjcprofitjcsharingjc/jc401Kjcplanjc-jcanswer--
Investmentjcearningsjcallocatedjcinjcproportionjctojcrelativejcaccountjcbalancesjcandjcemplo
yerjccontributionsjctojcthejcprofitjcsharingjcplanjcallocatedjcinjcproportionjctojcrelativejccompe
nsation

Describejcthejclimitsjcthatjcapplyjctojcqualifiedjcdefinedjccontributionjcplansjc-jcanswer--
Annualjclimitjcisjcthejclesserjcofjc100%jcofjcpayjcorjc$53,000.jcEmployerjcdeductionjclimitjcisjc2
5%jcforjcprofitjcsharingjcplans,jcmoneyjcpurchasejcplans,jcTargetjcplans,jchavejcmultiplejcdef
ined-
contributionjcplans.jcThejcannualjcadditionsjclimitjcforjcajcparticipantjcandjcmultiplejcdefined-
contributionjcplansjcofjcthejcemployerjcorjcrelatedjcemployersjcmustjcalsojcbejcaggregated

Definedjccontributionjcisjcgoodjcforjc-jcanswer--
CompaniesjcwithjcuncertainjccashjcflowjcOutlook,jcemployeesjcatjcyoungjcage,jcandjcretire
mentjcsavingsjcneedsjcwithinjccontributionjclimits

Targetjcbenefitjcplansjcarejcgoodjcforjc-jcanswer--
Itjcwouldjcskewjccontributionjcallocationsjctojcolderjcemployees.jcAlthoughjcthejcuncertaintyj
cofjcthejcamountjcofjcretirementjcbenefitjcisjcajcdrawback.jcTargetjcbenefitjcplansjcdojcnotjcallo

wjc401jckjcelectivejcdeferralsjcandjcemployerjccontributionsjcarejclimitedjctojc25jcnotjc15%jcofjc
coveredjcpayroll

Whatjcplanjcisjcgoodjcforjcajcnewjcbusinessjcwithjcfluctuatingjccashjcflowjcandjckeyjcemployee
sjcwhojcarejcolderjcthanjcthejcrank-and-filejc-jcanswer--
Anjcagejcweightedjcformulajccanjcbejcusedjcbyjcajcprofitjcsharingjcplan

Whatjctypejcofjcqualifiedjcplanjcisjcmostjcappropriatejcforjcmotivatingjcyoungerjclower-
paidjcemployeesjcandjcimprovingjccompanyjcperformancejc-jcanswer--
Profitjcsharingjcplanjccanjcrewardjcemployeesjcforjchelpingjctojcincreasejccompanyjcprofits.jc
401Kjccontributionsjcmightjcnotjcbejcaffordable

Legaljcrequirementsjcofjcprofitjcsharingjcplansjc-jcanswer--
Forfeituresjcmustjcbejcusedjctojcreducejcemployerjccontributionsjcorjcbejcreallocatedjctojcre
mainingjcparticipants.jcEmployerjcdeductionsjcforjcplanjccontributionsjcarejclimitedjctojc25%j
cofjcparticipantsjctotaljccompensation.jcAllocationsjctojcreportjcsuspensejcaccountjccannotjc

exceedjcthejclesserjcofjcajchundredjcpercentjcofjccompensationjcorjc$53,000

Legaljcrequirementsjcofjcmoneyjcpurchasejcpensionjcplansjc-jcanswer--
Thejcplanjcmustjcprovidejcajcdefinitejcandjcnonjcdiscretionaryjcemployerjccontributionjcform
ula.jcForfeituresjccanjcbejcreallocatedjctojcthejcremainingjcparticipantsjcaccountjcandjcajcnon
-
discriminatoryjcMaterjcarejcusedjctojcreducejcemployerjccontributions.jcAjcseparatejcemplo