CTP Tax Planning & Strategy 4

Question 1

A taxpayer who contributes appreciated stock (held more than one year) to a public charity can deduct which of the following?

Accepted Answer

The fair market value of the stock, subject to AGI limitations

Answer

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.

Question 2

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?

Accepted Answer

Law firm

Answer

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.

Question 3

Which installment sale method allows a taxpayer to spread gain recognition over multiple years as payments are received?

Accepted Answer

Section 453 installment method

Answer

Section 453 allows taxpayers to report gain in proportion to installment payments received, deferring recognition of gain and tax liability to future years.

Question 4

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)?

Accepted Answer

80%

Answer

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.

Question 5

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?

Accepted Answer

Pure rental property — all expenses deductible

Answer

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.

(CTP) Certified Tax Professional Practice Test

(CTP) Certified Tax Professional Practice Test

CTP Tax Planning & Strategy 4