Final Exam > Question 1
A grandchild’s federal income tax rate is 15 percent. In 2007 her grandfather gifts stock to her, which she sells in 2011 at a profit of $29,500. Under Code Sec. 1(c), the grandchild’s capital gains tax is:
XXZero
$2,950
$4,425
None of the above
Final Exam > Question 2
The kiddie tax applies to students attending school at least five months per year who are not yet age:
16
18
19
XX24
Final Exam > Question 3
Under the Tax Relief Act of 2010, the lifetime gift tax exemption amount in 2011 is:
$13,000
$26,000
$1,000,000
XX$5,000,000
Final Exam > Question 4
A grandparent’s gift of assets for college costs does not incur a transfer penalty for Medicaid if the transfer takes place prior to the lookback period of _____ before the grandparent applies for Medicaid.
12 months
24 months
48 months
XX60 months
Final Exam > Question 5
A reason to title state-issued college savings bonds in the child’s name rather than the grandparent’s is that:
XXThe bonds are countable assets for Medicaid eligibility and may subject the grandparent to an ineligibility period
The bonds are not counted in determining the child’s expected family contribution
The bonds are not treated as gifts for gift tax purposes
The funds are restricted to use in paying college expenses and not available to the child for other uses
Final Exam > Question 6
To use U.S. savings bonds for income tax-free funding of college expenses:
The bonds must be purchased in the child’s name
The bonds may not be used for dependents of the purchaser
The purchasing grandparent may not share the same "principal place of abode" as the student
XXThe adjusted gross income of the child’s parents filing jointly may not exceed $136,650 for bonds redeemed in 2011
Final Exam > Question 7
Which funding mechanism has the effect of insulating the beneficiary from future tuition increases?
State-issued college savings bonds
XXPrepaid tuition plans
529 college savings plans
Coverdell education savings accounts
Final Exam > Question 8
Which of the following does not apply to Coverdell education savings accounts?
VVV Funding the account is a transfer of assets that may incur a large transfer penalty for grandparents applying for Medicaid
XXThey may not be used to pay room and board charges and class fees
Their value is not guaranteed
They have relatively low maximum annual contribution of $2,000
(correct answer is "a" VVV)
Final Exam > Question 9
When a grandparent pays all or a portion of his six (6) grandchildren’s college tuition directly to each student’s respective educational institution, the gift tax does not apply. True or False?
XXTrue
False
Final Exam > Question 10
Enhancements to Coverdell Education Savings Accounts that were scheduled to sunset after 2010 (including an increased $2,000 contribution limit) have been extended through December 31, 2012. True or False?
XXTrue
False