CPB CPB Tax Planning & Optimization

Question 1

What is the annual federal gift tax exclusion amount per recipient for 2024?

Accepted Answer

$18,000

Answer

The annual gift tax exclusion for 2024 is $18,000 per recipient, allowing tax-free gifts up to that amount without using lifetime exemption.

Question 2

Which tax strategy involves deliberately selling investments at a loss to offset realized capital gains?

Accepted Answer

Tax-loss harvesting

Answer

Tax-loss harvesting involves selling depreciated securities to realize losses that can offset capital gains and up to $3,000 of ordinary income annually.

Question 3

What is the federal long-term capital gains tax rate applicable to the highest income bracket?

Accepted Answer

20%

Answer

The maximum federal long-term capital gains tax rate is 20%, applied to taxpayers in the highest ordinary income bracket.

Question 4

Which retirement account allows qualified withdrawals in retirement to be completely tax-free?

Accepted Answer

Roth IRA

Answer

A Roth IRA is funded with after-tax dollars, so qualified distributions in retirement are entirely tax-free, including earnings.

Question 5

The 'step-up in basis' rule provides that inherited assets receive a cost basis equal to:

Accepted Answer

The fair market value on the date of the decedent's death

Answer

The step-up in basis resets an inherited asset's cost basis to its fair market value at the decedent's date of death, eliminating embedded capital gains.

CPB - Certified Private Banker Practice Test

CPB - Certified Private Banker Practice Test

CPB CPB Tax Planning & Optimization