Caribou Cruise Tours has a traditional 401(k) plan for employees.

Question 8 (1 point)

Caribon Cruise Tours has a traditional 401(k) plan for employees.  Last year, payroll for employees covered under the plan was $500,000 and employee elective deferrals amounted to $100,000.  Which of the following is true?

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Question 8 options:

Caribon Cruise Tours can deduct up to $150,000 for federal income tax purposes
Caribon Cruise Tours can deduct no more than $125,000 for federal income tax purposes
employees paid income and payroll taxes on the amounts they chose to defer
a and c
a and b

Question 9 (1 point)

Sam has a daughter, Mary, to whom he would like to leave the bulk of his estate. All but which provision in Sam’s will would generally affect how much Mary will receive under Sam’s will?

Question 9 options:

The debts clause
The tax clause
The attestation clause
The residuary clause

Question 13 (1 point)

Elsie and her husband Zeb were married 55 years before he died last year.  When Zeb retired at age 65, he began receiving benefits from Social Security and Medicare Part A.  As a life-long homemaker, Elsie receives spouse benefits from Social Security.  Earlier this year, at age 75, Elsie was in a car accident, breaking her hip and cracking 4 ribs.  After two weeks in the hospital, she was transferred to a skilled nursing facility for 10 more days.  After her discharge, a visiting nurse came by her home once a week.  Which of the following services are covered under Medicare Part A for Elsie?

Question 13 options:

post-hospital extended care in a skilled nursing facility home and health service benefits
inpatient hospital care only
inpatient hospital care, post-hospital extended care in a skilled nursing facility home and health service benefits
inpatient hospital care and home health service benefits
inpatient hospital care and post-hospital extended care in a skilled nursing facility

Question 23 (1 point)

Under which of the following circumstances may the IRS attack the validity of a family limited partnership?

Question 23 options:

The family limited partnership has a valid business purpose
The assets within the partnership should be included within the decedent’s estate since decedent retained a lifetime income interest in the property
Family limited partnerships have withstood all IRS attacks
There is a written FLP agreement setting forth the rights of all the partners

Question 28 (1 point)

Jane Jones, a widow with two adult sons (Sam, Dave) is in a combined 48% federal and state estate tax bracket. Jane is charitably minded, so she transfers $1,000,000 of appreciated IBM stock to a charitable remainder annuity trust (CRAT), retaining a 6% annuity interest for herself. After Jane’s death, the CRAT assets will pass to the American Heart Association. If Jane does not set up a wealth replacement trust, Sam and Dave will inherit:

Question 28 options:


All of the following statements regarding disclaimers are true except:

Question 31 options:

A disclaiming party has absolutely no tax consequences associated with a qualified disclaimer
A disclaimer is a refusal by a beneficiary to accept benefits from a lifetime or testamentary transfer
Qualified disclaimers may be utilized as a flexible post-mortem estate planning strategy
The testator may rely on disclaimers to satisfy his estate planning objectives

Which of the following statements best describes the tax ramifications to the beneficiary of a DBO plan?

Question 34 options:

There will never be any tax ramifications to the beneficiary
The distributions will be taxed as salary to the beneficiary and subject to ordinary income tax
The distributions may be taxed as either ordinary income or capital gains depending on the employee’s contributions on the date of death
Payments received will be treated as gifts and taxed accordingly

Question 36 (1 point)

John creates an irrevocable trust into which he transfers income producing property. The trust provides income to his children for life; remainder to the grandchildren. John has appointed his wife, Sue, as the Trustee of the trust. Sue, as the Trustee, is given the power to apply trust income to purchase life insurance on John’s life. Who is responsible for the payment of the income tax liability attributed to the trust income?

Question 36 options:

Sue, as an individual
The children and grandchildren as trust beneficiaries
Sue, as the Trustee, and the children and grandchildren based upon the DNI calculation
John, as the Grantor of the trust

Donor made a gift of property to donee. At the time of the gift, the donor had a $90,000 basis in the property, the property had a fair market value equal to $80,000, and the donor paid gift tax of $10,000 with respect to the gift. If the donee sells the property for $75,000, the donee’s basis for purposes of determining loss is equal to

Question 38 options:


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