CTP Tax Planning & Strategy 3

Question 1

A married couple earns $500,000 combined. What is the additional Medicare tax rate applied to wages above the $250,000 threshold for joint filers?

Accepted Answer

0.9%

Answer

The Additional Medicare Tax is 0.9% on wages and self-employment income above $250,000 for married filing jointly ($200,000 for single filers).

Question 2

Which of the following Section 1231 transactions results in ordinary income rather than capital gain treatment when the asset was subject to accelerated depreciation?

Accepted Answer

Sale at a gain equal to accumulated depreciation (Section 1245 recapture)

Answer

Section 1245 recapture converts gain equal to prior depreciation deductions back to ordinary income, preventing taxpayers from converting ordinary deductions into lower-taxed capital gains.

Question 3

A taxpayer makes a $15,000 gift to a friend in 2024. How much of this gift is subject to federal gift tax reporting?

Accepted Answer

$0 — the entire amount is excluded

Answer

The 2024 annual gift tax exclusion is $18,000 per recipient; since $15,000 is below that threshold, no gift tax return is required and no taxable gift occurs.

Question 4

Under the passive activity loss rules, which taxpayer may deduct up to $25,000 of rental real estate losses against non-passive income?

Accepted Answer

A taxpayer who actively participates with MAGI below $100,000

Answer

The $25,000 rental real estate allowance phases out between $100,000 and $150,000 MAGI and requires the taxpayer to actively participate (not materially participate) in the rental activity.

Question 5

Which of the following best describes a tax-free reorganization under Section 368 of the IRC?

Accepted Answer

A corporate restructuring that meets statutory requirements allowing shareholders to defer gain recognition

Answer

Section 368 reorganizations (mergers, consolidations, stock-for-stock exchanges) allow shareholders to defer gain recognition when statutory requirements such as continuity of interest and business purpose are met.

(CTP) Certified Tax Professional Practice Test

(CTP) Certified Tax Professional Practice Test

CTP Tax Planning & Strategy 3