CTA Tax Planning and Strategy 2

Question 1

Which retirement plan allows the highest annual contribution limit for self-employed individuals in 2024?

Accepted Answer

Solo 401(k)

Answer

Traditional IRA

Answer

SIMPLE IRA

Answer

SEP-IRA

Question 2

What is the purpose of a like-kind exchange under IRC Section 1031?

Accepted Answer

To defer capital gains recognition when exchanging business or investment real property

Answer

To avoid paying any capital gains tax permanently

Answer

To convert ordinary income to capital gains

Answer

To accelerate depreciation deductions

Question 3

Which strategy allows high-income taxpayers to contribute to a Roth IRA indirectly by first contributing to a non-deductible traditional IRA?

Accepted Answer

Backdoor Roth IRA

Answer

Roth rollover

Answer

Mega Roth conversion

Answer

IRA recharacterization

Question 4

Qualified Opportunity Zone (QOZ) investments offer which tax benefit?

Accepted Answer

Deferral and potential reduction of capital gains taxes, plus exclusion of gains from QOZ investment appreciation

Answer

Immediate deduction of investment amount

Answer

100% exclusion of all investment income

Answer

Unlimited charitable deduction

Question 5

Which of the following is a valid strategy to avoid the 10% early withdrawal penalty from a retirement account?

Accepted Answer

Taking substantially equal periodic payments (SEPP) under Rule 72(t)

Answer

Withdrawing before age 55

Answer

Using funds for a vacation home purchase

Answer

Withdrawing for general living expenses

Question 6

A donor-advised fund (DAF) provides which tax planning benefit?

Accepted Answer

Enables an immediate charitable deduction while granting investment control with grants made over time

Answer

Allows the donor to receive income from donated assets

Answer

Provides a tax deduction only when grants are distributed to charities

Answer

Avoids all capital gains on contributed assets