Tax Planning & Strategy Flashcards
7 cards from real CTP 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 Planning & Strategy flashcards as text
A taxpayer who contributes appreciated stock (held more than one year) to a public charity can deduct which of the following?
Answer: The fair market value of the stock, subject to AGI limitations
Donating appreciated long-term capital gain property to a public charity allows a deduction at fair market value, limited to 30% of AGI, avoiding capital gains tax entirely.
Under the qualified business income (QBI) deduction of Section 199A, which of the following is a Specified Service Trade or Business (SSTB) that phases out at higher income levels?
Answer: Law firm
Law is explicitly listed as an SSTB under Section 199A; architecture and engineering are specifically excluded from SSTB classification, and real estate brokerage is not an SSTB.
Which installment sale method allows a taxpayer to spread gain recognition over multiple years as payments are received?
Answer: Section 453 installment method
Section 453 allows taxpayers to report gain in proportion to installment payments received, deferring recognition of gain and tax liability to future years.
A taxpayer's NOL from 2022 can be carried forward and used to offset what percentage of taxable income in future years under current law (post-TCJA)?
Answer: 80%
Under the Tax Cuts and Jobs Act, NOLs arising after December 31, 2017 can only offset up to 80% of taxable income in the carryforward year, with indefinite carryforward.
A taxpayer owns a vacation home that is rented for 45 days and used personally for 20 days during the year. How is it classified for tax purposes?
Answer: Pure rental property — all expenses deductible
When personal use does not exceed the greater of 14 days or 10% of rental days (10% of 45 = 4.5 days), the property is treated as a rental property and all ordinary expenses are deductible.
Which estate planning strategy involves an irrevocable trust where the grantor retains an annuity stream, with any remaining assets passing to heirs gift-tax-efficiently if the grantor survives the trust term?
Answer: Grantor Retained Annuity Trust (GRAT)
A GRAT allows the grantor to transfer appreciation above the IRS hurdle rate (Section 7520 rate) to beneficiaries gift-tax-free if the grantor outlives the trust term.
A taxpayer in the 37% bracket has $100,000 of short-term capital gains and $100,000 of long-term capital losses. What is the net tax result?
Answer: The losses fully offset the gains; $0 net tax
Capital losses (regardless of holding period) offset capital gains of either type; $100,000 long-term losses fully offset $100,000 short-term gains, resulting in zero net capital gain.