CANNON TRUST SCHOOL EXAM COMPLETE
QUESTIONS WITH VERIFIED ANSWERS
Question 1
A future interest that comes into existence after the termination of a prior interest.
Correct Answer
Remainder
Question 2
"Applicable law" refers to which of the following?
Federal law
Terms of the instrument
Trustee, policies and procedures
Court order
State law
Correct Answer
Federal law
Court order
State law
Question 3
Does a lifetime general power of appointment have income tax consequences?
Correct Answer
Yes
Page 1 of 104
,Question 4
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.
Correct Answer
Gift of $8,000 cash value life insurance policy to son.
Question 5
The strengthening in the U.S. dollar in comparison to other currencies would have the
effect of making which of the following true?
A. U.S. exports less competitive than domestic goods only, no effect on Foreign
imports.
B. U.S. exports more competitive than domestic goods only, no effect on Foreign
imports
C. Foreign imports less competitive than U.S. goods & U.S. exports more competitive
than domestic goods.
D. Foreign imports more competitive than U.S. goods & U.S. exports less competitive
than domestic goods.
Correct Answer
Foreign imports more competitive than U.S. goods & U.S. exports less competitive
than domestic goods.
Question 6
Keith died in November. In December, his company paid his estate $100,000 in
deferred compensation. Keith left his entire estate to his brother Michael. Which of
the following tax returns will NOT be affected by this payment?
A. US Estate Tax (Form 706)
B. Keith's final US individual income tax (Form 1040)
C. Keith's estate's US fiduciary income tax (Form 1041)
D. Michael's US individual income tax (Form 1040)
Correct Answer
Keith's final US individual income tax (Form 1040)
Page 2 of 104
,Question 7
The most important factor in the long-term performance of equity (stock) investments
is:
A. the economy.
B. interest rates.
C. the industry of the corporation.
D. the management of the corporation.
Correct Answer
the management of the corporation.
Question 8
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
Correct Answer
Principal and Income Law of the State
Question 9
Which is a fiduciary capacity?
Trustee
Custodial agent
Executor
Guardian
Correct Answer
Trustee
Executor
Guardian
Page 3 of 104
, Question 10
An individual or a trust institution nominated in a will and appointed by a court to
settle the estate of the testator.
Correct Answer
Executor
Question 11
Your client has invested $100,000 in a limited partnership. The limited partnership
later has a problem and is assessed claim of $1,000,000. What is your client's
maximum financial exposure to the claim?
A. $0
B. $100,000
C. $1,000,000
D. Unlimited
Correct Answer
$100,000
Question 12
An instrument in writing by which one person appoints another as agent conferring
the authority to perform certain specified acts or types of acts on behalf of the
__________
Correct Answer
principal
Question 13
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
Correct Answer
$25,000
Page 4 of 104
QUESTIONS WITH VERIFIED ANSWERS
Question 1
A future interest that comes into existence after the termination of a prior interest.
Correct Answer
Remainder
Question 2
"Applicable law" refers to which of the following?
Federal law
Terms of the instrument
Trustee, policies and procedures
Court order
State law
Correct Answer
Federal law
Court order
State law
Question 3
Does a lifetime general power of appointment have income tax consequences?
Correct Answer
Yes
Page 1 of 104
,Question 4
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.
Correct Answer
Gift of $8,000 cash value life insurance policy to son.
Question 5
The strengthening in the U.S. dollar in comparison to other currencies would have the
effect of making which of the following true?
A. U.S. exports less competitive than domestic goods only, no effect on Foreign
imports.
B. U.S. exports more competitive than domestic goods only, no effect on Foreign
imports
C. Foreign imports less competitive than U.S. goods & U.S. exports more competitive
than domestic goods.
D. Foreign imports more competitive than U.S. goods & U.S. exports less competitive
than domestic goods.
Correct Answer
Foreign imports more competitive than U.S. goods & U.S. exports less competitive
than domestic goods.
Question 6
Keith died in November. In December, his company paid his estate $100,000 in
deferred compensation. Keith left his entire estate to his brother Michael. Which of
the following tax returns will NOT be affected by this payment?
A. US Estate Tax (Form 706)
B. Keith's final US individual income tax (Form 1040)
C. Keith's estate's US fiduciary income tax (Form 1041)
D. Michael's US individual income tax (Form 1040)
Correct Answer
Keith's final US individual income tax (Form 1040)
Page 2 of 104
,Question 7
The most important factor in the long-term performance of equity (stock) investments
is:
A. the economy.
B. interest rates.
C. the industry of the corporation.
D. the management of the corporation.
Correct Answer
the management of the corporation.
Question 8
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
Correct Answer
Principal and Income Law of the State
Question 9
Which is a fiduciary capacity?
Trustee
Custodial agent
Executor
Guardian
Correct Answer
Trustee
Executor
Guardian
Page 3 of 104
, Question 10
An individual or a trust institution nominated in a will and appointed by a court to
settle the estate of the testator.
Correct Answer
Executor
Question 11
Your client has invested $100,000 in a limited partnership. The limited partnership
later has a problem and is assessed claim of $1,000,000. What is your client's
maximum financial exposure to the claim?
A. $0
B. $100,000
C. $1,000,000
D. Unlimited
Correct Answer
$100,000
Question 12
An instrument in writing by which one person appoints another as agent conferring
the authority to perform certain specified acts or types of acts on behalf of the
__________
Correct Answer
principal
Question 13
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
Correct Answer
$25,000
Page 4 of 104
