CRPC Sample Test Questions with
Complete Solutions99
Gift splitting - ANSWERS-Allows a married couple to double their allowable annual exclusions is
only allowed for married couples
Ownership limited to spouses only - ANSWERS-Joint tenancy tenancy by the entirety community
property
Grantor retained interest Trust Grit - ANSWERS-Grantor can receive all income earned by the
trust
Qualified terminable interest Property Trust Q-tip - ANSWERS-Income of a Q-tip goes to the
grantor's spouse
Charitable lead Trust CLT - ANSWERS-The income goes to charity
Power of appointment trust POA - ANSWERS-Income goes to the grantor's spouse
Valuation date for gifts - ANSWERS-The date on which the transfer is completed
Gross estate - ANSWERS-Includes all the property that is subject to the federal estate tax
whether or not owned by the decedent and whether or not included in the the probate or
taxable estate
Taxation of reinvestment of ordinary dividends - ANSWERS-Qualified dividends are subject to
the same tax rates applicable to long-term capital gains
,The basis for charitable contribution deduction for stock - ANSWERS-Based on the current fair
market value of the stock
Taxation of substitute payments in lieu of a dividend - ANSWERS-Substitute payments in lieu of a
dividend are not subject to preferential treatment and are treated as ordinary income
How does a stock dividend affect basis - ANSWERS-The basis is reduced to provide basis for
shares are received as a stock dividend
Net capital loss amount - ANSWERS-$3,000 per year are deductible
Taxation of qualified dividends - ANSWERS-Dividends are taxed at 15% or 20% if the dividends
fall into the 39.6% bracket
Text treatment for a shareholder participating in common stock dividend reinvestment program
- ANSWERS-The shareholder is treated as if he received a cash dividend equal to the fair market
value of the shares purchased under the plan
When is earned income taxed - ANSWERS-It is taxed in the year when the check was received
Medical expenses and AMT - ANSWERS-Most that are deducted are allowed for AMT purposes
10% of AGI
Bargain element on exercise of an incentive stock option and AMT - ANSWERS-Included as a
preference item for AMT
Private activity municipal bonds and AMT - ANSWERS-Interest from private activity Muni bonds
is an AMT preference item except for bonds issued in 2009 and 2010
,Home mortgage interest and AMT - ANSWERS-Home mortgage interest is allowed for regular
and AMT
Adjusted gross income - ANSWERS-Income remaining after subtracting the adjustments to
income
Domestic Partners transfer wealth to the other vs legal spouse - ANSWERS-Governor domestic
partner cannot take a marital deduction in excess of the gift tax annual exclusion for the transfer
while a donor spouse could
If a domestic partner is appointed as conservator or Guardian - ANSWERS-The individual should
make his or her desire to have the domestic partner appointed by executing written documents
approved by state law as intestacy laws typically follow the bloodline
Per year 4 retirement benefit increase over full retirement age - ANSWERS-8%
Qlac - ANSWERS-Suitable for those who are healthy and have a family history of longevity and
those entering retirement with Social Security as their only source of guaranteed income
Bucket approach to withdrawals from retirement savings - ANSWERS-...
Proper written Financial goal - ANSWERS-Specific in terms of gold dollar amount and time frame
Income replacement percentages - ANSWERS-Income replacement percentages vary between
low-income and high-income retirees. Income replacement ratios should not be used as the
only basis for planning. Are useful for younger clients as a guide to their long-term planning and
investing.
, Investment policy attributes - ANSWERS-Long-term perspective. Realistic. Clearly defined.
Asset allocation strategies - ANSWERS-Tactical. Core satellite. Strategic
Correlation and diversification - ANSWERS-The lowest correlation provides the most
diversification
Two major risks associated with Common Stocks - ANSWERS-Market risk and business risk
Two major risks associated with Bond investing - ANSWERS-Interest rate risk and purchasing
power risk
Calculating yield to maturity on the calculator - ANSWERS-Set the end mode
Allowable earnings limit for 2015 for no reduction in Social Security benefits - ANSWERS-
$15,720 earned income
Social Security benefits available when fully insured worker begins at full retirement age -
ANSWERS-At full retirement age the workers spouse will receive at least 50% of the workers PIA.
Capitulo 4 retirement age the PIAA is reduced by 25/36 of 1% for each of the first 36 months the
spouse is under full retirement age
How does tax-exempt interest affect social security taxation - ANSWERS-All tax-exempt income
is included to determine a social security taxation a maximum of 85% of Social Security benefits
are subject
Features of defined benefit plans - ANSWERS-Write a predetermined fix retirement benefit for
participating employees
Complete Solutions99
Gift splitting - ANSWERS-Allows a married couple to double their allowable annual exclusions is
only allowed for married couples
Ownership limited to spouses only - ANSWERS-Joint tenancy tenancy by the entirety community
property
Grantor retained interest Trust Grit - ANSWERS-Grantor can receive all income earned by the
trust
Qualified terminable interest Property Trust Q-tip - ANSWERS-Income of a Q-tip goes to the
grantor's spouse
Charitable lead Trust CLT - ANSWERS-The income goes to charity
Power of appointment trust POA - ANSWERS-Income goes to the grantor's spouse
Valuation date for gifts - ANSWERS-The date on which the transfer is completed
Gross estate - ANSWERS-Includes all the property that is subject to the federal estate tax
whether or not owned by the decedent and whether or not included in the the probate or
taxable estate
Taxation of reinvestment of ordinary dividends - ANSWERS-Qualified dividends are subject to
the same tax rates applicable to long-term capital gains
,The basis for charitable contribution deduction for stock - ANSWERS-Based on the current fair
market value of the stock
Taxation of substitute payments in lieu of a dividend - ANSWERS-Substitute payments in lieu of a
dividend are not subject to preferential treatment and are treated as ordinary income
How does a stock dividend affect basis - ANSWERS-The basis is reduced to provide basis for
shares are received as a stock dividend
Net capital loss amount - ANSWERS-$3,000 per year are deductible
Taxation of qualified dividends - ANSWERS-Dividends are taxed at 15% or 20% if the dividends
fall into the 39.6% bracket
Text treatment for a shareholder participating in common stock dividend reinvestment program
- ANSWERS-The shareholder is treated as if he received a cash dividend equal to the fair market
value of the shares purchased under the plan
When is earned income taxed - ANSWERS-It is taxed in the year when the check was received
Medical expenses and AMT - ANSWERS-Most that are deducted are allowed for AMT purposes
10% of AGI
Bargain element on exercise of an incentive stock option and AMT - ANSWERS-Included as a
preference item for AMT
Private activity municipal bonds and AMT - ANSWERS-Interest from private activity Muni bonds
is an AMT preference item except for bonds issued in 2009 and 2010
,Home mortgage interest and AMT - ANSWERS-Home mortgage interest is allowed for regular
and AMT
Adjusted gross income - ANSWERS-Income remaining after subtracting the adjustments to
income
Domestic Partners transfer wealth to the other vs legal spouse - ANSWERS-Governor domestic
partner cannot take a marital deduction in excess of the gift tax annual exclusion for the transfer
while a donor spouse could
If a domestic partner is appointed as conservator or Guardian - ANSWERS-The individual should
make his or her desire to have the domestic partner appointed by executing written documents
approved by state law as intestacy laws typically follow the bloodline
Per year 4 retirement benefit increase over full retirement age - ANSWERS-8%
Qlac - ANSWERS-Suitable for those who are healthy and have a family history of longevity and
those entering retirement with Social Security as their only source of guaranteed income
Bucket approach to withdrawals from retirement savings - ANSWERS-...
Proper written Financial goal - ANSWERS-Specific in terms of gold dollar amount and time frame
Income replacement percentages - ANSWERS-Income replacement percentages vary between
low-income and high-income retirees. Income replacement ratios should not be used as the
only basis for planning. Are useful for younger clients as a guide to their long-term planning and
investing.
, Investment policy attributes - ANSWERS-Long-term perspective. Realistic. Clearly defined.
Asset allocation strategies - ANSWERS-Tactical. Core satellite. Strategic
Correlation and diversification - ANSWERS-The lowest correlation provides the most
diversification
Two major risks associated with Common Stocks - ANSWERS-Market risk and business risk
Two major risks associated with Bond investing - ANSWERS-Interest rate risk and purchasing
power risk
Calculating yield to maturity on the calculator - ANSWERS-Set the end mode
Allowable earnings limit for 2015 for no reduction in Social Security benefits - ANSWERS-
$15,720 earned income
Social Security benefits available when fully insured worker begins at full retirement age -
ANSWERS-At full retirement age the workers spouse will receive at least 50% of the workers PIA.
Capitulo 4 retirement age the PIAA is reduced by 25/36 of 1% for each of the first 36 months the
spouse is under full retirement age
How does tax-exempt interest affect social security taxation - ANSWERS-All tax-exempt income
is included to determine a social security taxation a maximum of 85% of Social Security benefits
are subject
Features of defined benefit plans - ANSWERS-Write a predetermined fix retirement benefit for
participating employees
