Question 4

1. Which of the following are reasons why an employer might use an ESOP/stock bonus plan? (1) to guarantee specific retirement income amounts for employees (2) to provide a tax-advantaged means for employees to acquire company stock (3) to allow the company to borrow money for business needs (4) to broaden company ownership to help prevent a hostile takeover

   	a.	(1) only
   	b.	(1) and (2) only
   	c.	(1) (2) and (3) only
   	d.	(1) (2) (3) and (4) only

2.5 points

Question 5

1. Which of the following are estate planning-related problems that an ESOP or stock bonus plan may help to reduce or eliminate? (1) plan income is taxed at the lower 15% marginal tax rate (2) funds accumulated by the corporation for the purchase of stock at death may result in exposure to the accumulated earnings tax (3) receipt by the corporation of life insurance proceeds may trigger the corporate AMT (4) insurance owned by the corporation to fund a buyout increases corporate value and, thereby, federal estate tax

   	a.	(1) and (3) only
   	b.	(1) (2) and (3) only
   	c.	(2) (3) and (4) only
   	d.	(1) (2) (3) and (4)

2.5 points

Question 6

1. Which one of the following employee categories would typically benefit most from a savings or thrift plan?

   	a.	low income; nearing retirement
   	b.	high income; nearing retirement
   	c.	low income; young age
   	d.	high income; young age