CIA Tax Planning & Compliance 3

Question 1

When an insured property has accumulated depreciation deducted on prior tax returns and is destroyed, the insurance settlement may trigger which additional tax?

Accepted Answer

Depreciation recapture under Section 1245 or 1250

Answer

Section 1245/1250 recapture applies when insurance proceeds exceed the property's adjusted basis, converting part of the gain to ordinary income.

Question 2

Self-employed individuals may deduct 100% of health insurance premiums paid for themselves and their families on which tax form line?

Accepted Answer

Form 1040, as an above-the-line deduction

Answer

Self-employed health insurance premiums are deducted as an above-the-line adjustment to income on Form 1040, reducing AGI directly.

Question 3

Under IRC Section 79, employer-provided group term life insurance coverage exceeding what face amount creates taxable income for the employee?

Accepted Answer

$50,000

Answer

Coverage above $50,000 of employer-paid group term life insurance results in taxable imputed income to the employee based on IRS Table I rates.

Question 4

An appraisal used to support a charitable contribution deduction of property valued above $5,000 must be completed by a qualified appraiser and filed on which IRS form?

Accepted Answer

Form 8283

Answer

Form 8283 (Noncash Charitable Contributions) is required for donated property valued over $5,000 and must include the qualified appraisal summary.

Question 5

When a business replaces destroyed equipment with like-kind property under Section 1033, the replacement property's tax basis is:

Accepted Answer

The cost of the new property minus any deferred gain

Answer

The replacement property's basis equals its cost minus the deferred gain, preserving the embedded gain for future recognition.

(CIA) Certified Insurance Appraiser Practice Test

(CIA) Certified Insurance Appraiser Practice Test

CIA Tax Planning & Compliance 3