CPB CPB Tax Planning & Optimization 3

Question 1

What is a Qualified Opportunity Zone (QOZ) investment primarily designed to provide?

Accepted Answer

Tax-advantaged investment in designated economically distressed communities

Answer

QOZ investments allow taxpayers to defer and potentially reduce capital gains taxes by reinvesting those gains into designated distressed communities within 180 days.

Question 2

Which depreciation system accelerates tax deductions more heavily in the early years of a business asset's life?

Accepted Answer

Modified Accelerated Cost Recovery System (MACRS)

Answer

MACRS is the IRS-required depreciation system for most US business assets, allowing faster deductions in early years through accelerated recovery periods.

Question 3

What is the primary tax benefit of a Charitable Remainder Trust (CRT) for a high-net-worth private banking client?

Accepted Answer

An income stream for the donor plus an immediate partial charitable deduction

Answer

A CRT provides the donor with an annuity or unitrust income stream, an upfront charitable deduction, and the ability to diversify appreciated assets without immediate capital gains.

Question 4

Which IRS provision allows owners of pass-through businesses to potentially deduct up to 20% of qualified business income (QBI)?

Accepted Answer

Section 199A deduction

Answer

Section 199A, created by the Tax Cuts and Jobs Act of 2017, allows eligible pass-through business owners to deduct up to 20% of QBI, subject to income and business-type limitations.

Question 5

What is the tax strategy known as 'bunching' used to accomplish?

Accepted Answer

Concentrating deductible expenses into one tax year to exceed the standard deduction threshold

Answer

Bunching involves deliberately timing deductible expenses (such as charitable contributions or medical costs) into alternating years to surpass the standard deduction and itemize.

CPB - Certified Private Banker Practice Test

CPB - Certified Private Banker Practice Test

CPB CPB Tax Planning & Optimization 3