CTA Tax Planning and Strategy

Question 1

Which tax planning strategy involves shifting income to a family member in a lower tax bracket?

Accepted Answer

Income splitting

Answer

Income acceleration

Answer

Tax deferral

Answer

Loss harvesting

Question 2

What is the primary benefit of tax deferral strategies?

Accepted Answer

Moving taxable income to a later period, allowing current funds to grow

Answer

Eliminating tax permanently

Answer

Reducing the applicable tax rate immediately

Answer

Avoiding state income taxes

Question 3

Tax-loss harvesting is a strategy that involves:

Accepted Answer

Selling securities at a loss to offset capital gains

Answer

Selling appreciated assets to pay off debt

Answer

Converting traditional IRA to Roth IRA

Answer

Accelerating deductions into the current year

Question 4

Which strategy is used to convert a traditional IRA to a Roth IRA, paying taxes now to receive tax-free distributions later?

Accepted Answer

Roth conversion

Answer

Rollover

Answer

Direct transfer

Answer

Stretch IRA

Question 5

The 'bunching' strategy for charitable contributions involves:

Accepted Answer

Concentrating multiple years' donations into one year to exceed the standard deduction

Answer

Donating to multiple charities simultaneously

Answer

Making charitable contributions through a business entity

Answer

Donating appreciated property instead of cash

Question 6

Which type of trust is used to reduce estate taxes by making an irrevocable gift of appreciating assets while retaining an income stream?

Accepted Answer

Grantor retained annuity trust (GRAT)

Answer

Revocable living trust

Answer

Charitable remainder trust

Answer

Special needs trust