AFIP AFIP Taxation and Estate Planning in F&I 3

Question 1

Which tax form must dealers file with the IRS when a customer pays more than $10,000 in cash for a vehicle?

Accepted Answer

Form 8300

Answer

Form 1099-C

Answer

Form 4506-T

Answer

Form W-9

Question 2

When a lender cancels a portion of a customer's auto loan (e.g., after repossession), the canceled amount is reported to the borrower on which IRS form?

Accepted Answer

Form 1099-C

Answer

Form 1098

Answer

Form 1099-INT

Answer

Form W-2

Question 3

In estate planning, a 'durable power of attorney for finances' authorizes:

Accepted Answer

A designated agent to manage financial affairs if the principal becomes incapacitated

Answer

A trustee to distribute assets after death

Answer

The state to appoint a guardian for minor children

Answer

An executor to pay estate taxes from probate assets

Question 4

Which of the following best describes a 'luxury vehicle tax' limitation under IRS rules for business vehicles?

Accepted Answer

Annual depreciation caps that limit how much of a passenger automobile's cost can be deducted for business use

Answer

A surtax on personal vehicles over $80,000 at point of sale

Answer

A state excise tax assessed annually on high-value vehicles

Answer

A dealer-assessed fee on vehicles with a sticker price above $50,000

Question 5

A customer wants to leave their vehicle to a minor child. From an estate planning perspective, what is the most important consideration?

Accepted Answer

That a minor cannot legally own titled property and a custodian or trust must be designated

Answer

Whether the vehicle's value exceeds the federal estate tax exemption

Answer

That the vehicle must first be sold and proceeds placed in a 529 account

Answer

That the DMV will automatically transfer title to the surviving parent

Question 6

For federal income tax purposes, proceeds from a life insurance policy paid to a beneficiary upon the insured's death are generally:

Accepted Answer

Income-tax-free to the beneficiary

Answer

Fully taxable as ordinary income

Answer

Subject to capital gains tax based on the policy's cash value growth

Answer

Taxable only if the policy was employer-provided