Question 26

When Mary died, a qualified domestic trust was created for her husband Tim. All but which of the following would cause imposition of the estate tax on the QDOT?

A - Income is distributed to Tim's daughter

B - Capital is distributed to Tim.

C - Tim dies

D - A distribution is made to Tim on account of hardship

Question 27

Bob D. Builder, owner of Bobs Construction, would like to install a retirement plan that would help reduce turnover. Bob should consider using a

A - a defined benefit plan

B - A profit sharing plan

C - a savings plan

D - 401(k) plan

E - an age weighted plan

Question 28

Corporation has purchased a key person life insurance policy on its President, a 51% shareholder. President dies. What impact does the key person policy have in determining the value of the Presidents gross estate?

A - 51% of the death benefit proceeds will be included in the Presidents gross estate

B - 51% of the death benefit proceeds will determine the value of the corporate stock to be included in the Presidents gross estate

C - Since the corporation owned the policy, there is no impact on the gross estate

D - As long as the key person is payable to the Presidents personal beneficiary, no portion of the death benefit proceeds will be included in the Presidents gross estate

Question 29

June Tandy is covered under a SIMPLE IRA at Barker Jones Auction House, where she is employed. This year, no salary deductions or employer contributions were allocated to her SIMPLE IRA. If June makes a contribution to her personal IRA this year, her deduction limit will be based on those applying to a person who is not an active participant in a qualified retirement plan.

True

False

Question 30

The 5/5 power relates to:

A - Limiting a gift of the property upon lapse of a general power of appointment

B - The ascertainable standard

C - The amount of income tax to be paid by the holder of a general power of appointment

D - The rule against perpetuities