AAMS AAMS Tax Planning & Wealth Transfer

Question 1

Which account type allows investment gains to grow tax-deferred and be withdrawn tax-free in retirement, provided certain conditions are met?

Accepted Answer

Roth IRA

Answer

Roth IRA contributions are made with after-tax dollars, and qualified withdrawals of both principal and earnings are tax-free in retirement.

Question 2

The annual gift tax exclusion for 2024 allows an individual to give up to what amount per recipient without triggering a gift tax return?

Accepted Answer

$18,000

Answer

The 2024 annual gift tax exclusion is $18,000 per recipient, allowing tax-free gifting up to that amount without filing a Form 709.

Question 3

Which estate planning tool allows assets to pass directly to beneficiaries outside of probate while retaining the grantor's control during their lifetime?

Accepted Answer

Revocable living trust

Answer

A revocable living trust allows the grantor to maintain control over assets during their lifetime while ensuring a smooth, probate-free transfer to beneficiaries at death.

Question 4

Tax-loss harvesting is a strategy that involves:

Accepted Answer

Selling depreciated assets to offset capital gains and reduce tax liability

Answer

Tax-loss harvesting involves selling securities at a loss to offset capital gains realized elsewhere in the portfolio, thereby reducing current tax liability.

Question 5

The 'step-up in cost basis' at death means that:

Accepted Answer

Inherited assets receive a new basis equal to fair market value at the date of death

Answer

A stepped-up basis resets the cost basis of inherited assets to their fair market value at the date of death, eliminating capital gains tax on pre-death appreciation.

(AAMS) Accredited Asset Management Specialist Practice Test

(AAMS) Accredited Asset Management Specialist Practice Test

AAMS AAMS Tax Planning & Wealth Transfer