Practice Test Geeks(CIMA) Certified Investment Management Analyst Practice Test
← All CIMA Flashcard Decks

Tax Law & Regulations Flashcards

7 cards from real CIMA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

Read the first 7 Tax Law & Regulations flashcards as text

  1. Under IRC Section 1411, the Net Investment Income Tax (NIIT) applies at what rate for high-income taxpayers?

    Answer: 3.8%

    The NIIT imposes a 3.8% surtax on the lesser of net investment income or the amount by which MAGI exceeds the threshold ($200,000 single/$250,000 MFJ).

  2. A taxpayer sells a partnership interest held for 3 years. The portion attributable to 'hot assets' under IRC Section 751 is taxed as:

    Answer: Ordinary income

    IRC Section 751 requires that gain attributable to unrealized receivables and inventory items (hot assets) be recharacterized as ordinary income regardless of holding period.

  3. Which type of trust is included in the grantor's taxable estate at death because the grantor retains an interest?

    Answer: Qualified Personal Residence Trust

    A QPRT is included in the grantor's estate if the grantor dies during the trust term because IRC Section 2036 pulls back assets where the grantor retains a life interest.

  4. The wash-sale rule under IRC Section 1091 disallows a loss when substantially identical securities are purchased within how many days before or after the sale?

    Answer: 30 days

    The wash-sale rule disallows a realized loss if the taxpayer buys substantially identical securities within 30 days before or after the loss sale (a 61-day window total).

  5. For purposes of the alternative minimum tax (AMT), which preference item must be added back to regular taxable income?

    Answer: Municipal bond interest from private activity bonds

    Interest on private activity bonds is a tax preference item that must be included in AMTI, unlike interest on general obligation municipal bonds.

  6. A married couple files jointly and has a combined RMD of $40,000 from IRAs. They donate $20,000 directly from the IRA to charity. The taxable RMD is:

    Answer: $20,000

    A Qualified Charitable Distribution (QCD) of up to $105,000 per year (2024) satisfies the RMD and is excluded from income, so only the remaining $20,000 is taxable.

  7. Under the step-up in basis rules (IRC Section 1014), inherited assets generally receive a basis equal to:

    Answer: Fair market value at the date of death

    IRC Section 1014 provides that inherited assets receive a basis equal to FMV on the date of death, eliminating built-in gain (or loss) for the heir.