AAMS AAMS Tax Planning & Wealth Transfer

Question 1

Which account type allows investment gains to grow tax-deferred and be withdrawn tax-free in retirement, provided certain conditions are met?

Accepted Answer

Roth IRA

Answer

Traditional IRA

Answer

SEP-IRA

Answer

Taxable brokerage account

Question 2

The annual gift tax exclusion for 2024 allows an individual to give up to what amount per recipient without triggering a gift tax return?

Accepted Answer

$18,000

Answer

$10,000

Answer

$15,000

Answer

$25,000

Question 3

Which estate planning tool allows assets to pass directly to beneficiaries outside of probate while retaining the grantor's control during their lifetime?

Accepted Answer

Revocable living trust

Answer

Irrevocable life insurance trust

Answer

Testamentary trust

Answer

Charitable remainder trust

Question 4

Tax-loss harvesting is a strategy that involves:

Accepted Answer

Selling depreciated assets to offset capital gains and reduce tax liability

Answer

Selling appreciated assets to lock in gains before year-end

Answer

Converting traditional IRA assets to Roth to reduce future taxes

Answer

Reinvesting dividends in tax-deferred accounts

Question 5

The 'step-up in cost basis' at death means that:

Accepted Answer

Inherited assets receive a new basis equal to fair market value at the date of death

Answer

The estate pays capital gains tax on all unrealized appreciation

Answer

The heir must pay ordinary income tax on inherited assets

Answer

The decedent's original purchase price is carried over to the heir

Question 6

Which strategy involves converting a portion of a traditional IRA to a Roth IRA during a year when the client is in a temporarily lower tax bracket?

Accepted Answer

Roth conversion strategy

Answer

Roth contribution strategy

Answer

IRA rollover

Answer

Backdoor Roth IRA