mortality and expense risk charge
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The mortality risk charge is to cover the risk that the annuity owner will die
prior to annuitization, triggering the insurance company's contractual
obligation to pay a death benefit to a beneficiary, which may be more than
the annuity's account value. The mortality risk charge also compensates the
insurer for assuming the risk that the annuitant will live longer than
estimated by the company. The expense risk charge compensates the
insurance company for assuming the risk that the company's actual
expenses in administering the contract and the separate account will
exceed the amount recovered through other charges. These charges
generally are limited to the funds in the separate account, not those in the
general account.
If a taxpayer has a tax liability of $9,139.50 and taxable income of $60,000, what is his
effective tax rate?
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$9,139.50 ÷ $60,000 = 15.23%
skip person
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A skip person is an individual who is deemed to be two or more
generations below the transferor, such as a grandchild or great-grandchild,
or a trust in which all interests are held by skip persons.
Define the following variable annuity costs. a. contingent deferred sales charge
(surrender charge)
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Also known as a surrender charge, it is a sales charge assessed if the
annuity owner surrenders the contract within a certain number of years of
the purchase of the contract. It is assessed on a declining basis, typically
7% if surrendered within the first year, 6% if within the second year, and so
on.
Explain the difference between when income is reported under the cash and the
accrual methods of accounting.
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, Cash income is recognized when it is actually or constructively received.
Constructive receipt occurs when there is an unrestricted right to income
that has not been reduced to the taxpayers' possession. Accrual income is
recognized when earned, not necessarily when received
Contrarians. High put/call ratio
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=buy
Estate Tax
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tate tax is imposed on an estate for the privilege of transferring property at
death. Usually, the tax is based on the total value of a decedent's estate
and does not depend on the shares of individual recipients or their
relationship to the decedent.
What is at the top of the investment pyrimid?
what is at the bottom?
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, federal gift tax Sequence
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Determine the total value of gifts for the current year (includes completed
gifts only and does not include direct and exclusive payments of tuition
and medical expenses for another's benefit).
(2) Reduce the value by the appropriate exclusions and deductions (gift
splitting, annual exclusions, marital deductions, and charitable deductions)
to determine the taxable gifts for the current year.
(3) Add all prior taxable gifts to determine the total taxable gifts.
(4) Apply the correct tax rate from the current gift tax table to the total
taxable gifts to determine the total tentative tax.
(5) Using the current gift tax rate table, subtract the tentative tax on prior
taxable gifts to determine the tentative tax for the current year.
(6) Subtract any unused applicable gift tax credit amount to determine the
net gift tax due.
An executive elects to defer her bonus after it has already been paid.
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The bonus is taxable income to the executive. An employee must enter into
an agreement to defer income before it is paid, payable, or otherwise
made available
Gift Tax basis
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The mortality risk charge is to cover the risk that the annuity owner will die
prior to annuitization, triggering the insurance company's contractual
obligation to pay a death benefit to a beneficiary, which may be more than
the annuity's account value. The mortality risk charge also compensates the
insurer for assuming the risk that the annuitant will live longer than
estimated by the company. The expense risk charge compensates the
insurance company for assuming the risk that the company's actual
expenses in administering the contract and the separate account will
exceed the amount recovered through other charges. These charges
generally are limited to the funds in the separate account, not those in the
general account.
If a taxpayer has a tax liability of $9,139.50 and taxable income of $60,000, what is his
effective tax rate?
,Give this one a try later!
$9,139.50 ÷ $60,000 = 15.23%
skip person
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A skip person is an individual who is deemed to be two or more
generations below the transferor, such as a grandchild or great-grandchild,
or a trust in which all interests are held by skip persons.
Define the following variable annuity costs. a. contingent deferred sales charge
(surrender charge)
Give this one a try later!
Also known as a surrender charge, it is a sales charge assessed if the
annuity owner surrenders the contract within a certain number of years of
the purchase of the contract. It is assessed on a declining basis, typically
7% if surrendered within the first year, 6% if within the second year, and so
on.
Explain the difference between when income is reported under the cash and the
accrual methods of accounting.
Give this one a try later!
, Cash income is recognized when it is actually or constructively received.
Constructive receipt occurs when there is an unrestricted right to income
that has not been reduced to the taxpayers' possession. Accrual income is
recognized when earned, not necessarily when received
Contrarians. High put/call ratio
Give this one a try later!
=buy
Estate Tax
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tate tax is imposed on an estate for the privilege of transferring property at
death. Usually, the tax is based on the total value of a decedent's estate
and does not depend on the shares of individual recipients or their
relationship to the decedent.
What is at the top of the investment pyrimid?
what is at the bottom?
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, federal gift tax Sequence
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Determine the total value of gifts for the current year (includes completed
gifts only and does not include direct and exclusive payments of tuition
and medical expenses for another's benefit).
(2) Reduce the value by the appropriate exclusions and deductions (gift
splitting, annual exclusions, marital deductions, and charitable deductions)
to determine the taxable gifts for the current year.
(3) Add all prior taxable gifts to determine the total taxable gifts.
(4) Apply the correct tax rate from the current gift tax table to the total
taxable gifts to determine the total tentative tax.
(5) Using the current gift tax rate table, subtract the tentative tax on prior
taxable gifts to determine the tentative tax for the current year.
(6) Subtract any unused applicable gift tax credit amount to determine the
net gift tax due.
An executive elects to defer her bonus after it has already been paid.
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The bonus is taxable income to the executive. An employee must enter into
an agreement to defer income before it is paid, payable, or otherwise
made available
Gift Tax basis
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