CPWA EXAM QUESTIONS AND REVISED ANSWERS ALL CORRECT 2024 UPDATE
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CPWA
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CPWA
CPWA EXAM QUESTIONS AND REVISED ANSWERS ALL CORRECT 2024 UPDATE
A general power of appointment is a power exercisable in favor of the decedent, his estate, his creditors, or the creditors of his estate. One of several notable exceptions includes situations where there is a power limited by someth...
CPWA EXAM QUESTIONS AND
REVISED ANSWERS ALL
CORRECT 2024 UPDATE
A general power of appointment is a power exercisable in favor of the decedent, his
estate, his creditors, or the creditors of his estate. One of several notable exceptions
includes situations where there is a power limited by something called a(n)
_________________ relating to health, education, support, or maintenance. - Answer-
ascertainable standard
The GST tax on a direct skip is to be paid by the __________. - Answer- transferor
Section 83(b) elections apply to ____ and ____ but not ____. - Answer- ESOs and
Restricted stock but not RSUs
The so-called bargain element of an incentive stock option at exercise is
____________. - Answer- considered an AMT preference item
A Section 83(b) election must be elected within _____ days of grant. - Answer- 30
The primary tax goal of the ____________ is to create long-term capital gains treatment
on the bargain element while helping avoid AMT. - Answer- tandem exercise
The Net Unrealized Appreciation (NUA) strategy seeks to trade ____ tax treatment on
(retirement/non-retirement) assets for ____ cap gains treatment - Answer- ordinary
income treatment on retirement assets for long term
The following strategies: variable prepaid forwards, sale of restricted stock, and writing
over the counter covered calls all line up well for the following client need or goal:
____________. - Answer- Liquidity
The following strategies: zero premium collar, purchase over the counter put options,
and participating collars all line up well for the following client need or goal:
___________________. - Answer- Hedging
Special tax treatment is allowed under Section ______ where a redemption of the
decedent's stock is treated as an exchange and not a dividend, in cases where more
than 35% of the decedent's adjusted gross estate consists of the stock of the closely
held corporation. - Answer- 303
, When qualifications are met, Section _______ allows for one to elect to defer
completely for five years payment of the portion of the estate taxes attributable to the
closely held business interest and thereafter pay the deferred portion of the estate taxes
in up to 10 annual installments. - Answer- 6166
The ________________ involves the sale of property in exchange for an installment
note calling for a specified number of fixed payments at a specified interest rate over a
set period of time, but also provides that the note payments terminate upon the death of
the seller. - Answer- Self Canceling Installment Note (SCIN)
The termination of a SCIN does have potentially adverse income tax consequences. A
SCIN works "best" if the seller ______ survive the term of the note - Answer- does not
The business owner (transferor) transfers ownership of the business to the family
member (transferee) in exchange for the transferee's promise (which must be
unsecured) to make payments to the transferor for life. If the _________________ is
structured successfully, there is no gift tax cost and the value of the annuity is not
included in the annuitant's estate. However, if the annuitant's basis is high (such as a
stepped-up basis received by a surviving spouse), the ________________ remains a
viable planning alternative. - Answer- Private Annuity
These are irrevocable trusts to which the trust grantor (the business owner) transfers
property (some part of the business interest) while retaining the right to receive an
annuity or unitrust interest (i.e., a "qualified interest" within Code Section 2702) for a
fixed term of years. When the term of years expires, the property passes to the
designated remainder beneficiaries of the trust (the business owner's children). -
Answer- GRAT or GRUT
GRATs and GRUTs are only effective to accomplish their intended transfer tax savings
"if" the grantor ________________. - Answer- survives the term of the trust
This structure is designed to allow an income tax-free sale of property with appreciation
potential to be made to a trust whose beneficiaries are the heirs of the trust grantor. The
appreciation on the property sold to the trust is removed from the trust grantor's estate.
The trust is drafted so that the grantor is treated as the owner of the trust for income tax
purposes, but not for estate tax purposes. This is accomplished by including certain
administrative powers in the trust to be retained by the grantor. - Answer- Intentionally
Defective Grantor Trust (IDGT)
The following type of trust is usually specifically created in order to transfer assets to a
future generation within the family up to the maximum period of time permitted by law.
They are often set up to provide life estates for every generation of beneficiaries to
come and assets with high appreciation potential are gifted to this kind of trust in order
to maximize or leverage the value of the GST exemption. - Answer- Dynasty trust
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