AIP AIP Tax Planning & Estate Strategies 2

Question 1

A 'qualified opportunity zone' investment allows investors to defer or reduce capital gains taxes by:

Accepted Answer

Investing realized gains in designated economically distressed areas within 180 days

Answer

Under the Opportunity Zone program, investors who reinvest capital gains into a Qualified Opportunity Fund within 180 days can defer taxes and potentially eliminate gains on the new investment if held 10+ years.

Question 2

Which estate planning tool allows a person to specify how assets are distributed at death while avoiding the probate process?

Accepted Answer

A revocable living trust

Answer

Assets held in a revocable living trust transfer directly to beneficiaries upon death without going through the public and time-consuming probate process.

Question 3

The annual gift tax exclusion allows an individual to give up to a set amount per recipient per year:

Accepted Answer

Free from gift tax, with no impact on the lifetime exemption

Answer

Gifts within the annual exclusion ($18,000 per recipient in 2024) are completely free of gift tax and do not reduce the donor's lifetime gift and estate tax exemption.

Question 4

What is the primary purpose of a 529 college savings plan?

Accepted Answer

To allow tax-free growth and tax-free withdrawals for qualified education expenses

Answer

529 plans grow tax-deferred and distributions used for qualified education expenses — tuition, books, room and board — are entirely tax-free at the federal level.

Question 5

In tax planning, 'income shifting' refers to:

Accepted Answer

Moving income to a family member in a lower tax bracket to reduce the overall tax burden

Answer

Income shifting strategies legally transfer income-producing assets or business income to relatives in lower brackets, reducing the family's total tax liability.

(AIP) Accredited Investment Professional Certification Practice Test

(AIP) Accredited Investment Professional Certification Practice Test

AIP AIP Tax Planning & Estate Strategies 2