Capstone Exam 2

A wash sale occurs when an investor acquires substantially identical stock during the __________ days prior to, or __________ days after the date of sale. A. 30, 30 B. 45, 45 C. 30, 45 D. 45, 30

30, 30

Section 121 - starter 401(k) plans for employers with no retirement plan

all employees are automatically enrolled in the plan at a 3-15% of compensation deferral rate

Section 332 - employers allowed to replace SIMPLE retirement accounts with safe harbor 401(k) plans

allows and employer to replace a SIMPLE IRA plan with a SIMPLE 401(k) plan or other 401(k) plan that requires mandatory employer contributions during a plan year and is effective for plan years beginning after Dec 31 2023

Section 601 - SIMPLE and SEP Roth IRAs

allows employers to offer employees the ability to treat employee and employer SEP contributions as Roth (in whole or in part)

Section 101 - Expanding automatic enrollment in retirement plans

at least 3% starting and increased by 1% until it reaches 10%, but not more than 15%

Section 126 - special rules for certain distributions from long-term qualified tuition programs to Roth IRAs

beneficiaries of 529 college savings accounts would be permitted to rollover up to $35,000 over the course of their lifetime from any 529 accounts in their name to their Roth IRA - must be opened for longer than 15 years

all but which of which of the following are characteristics of ETFs

trades settle at the end of the trading day, similar to mutual finds

Which of the following represents the maximum amount of capital loss that a single taxpayer can deduct in a single year?

up to the amount of capital gain plus $3000

Cliff gives stock worth a total of $40,000 in equal shares to his two daughters. Cliff's basis in the stock was $16,000. Which daughter's basis in the stock they now own?

$8,000

what is the maximum contribution a donor can make in a single year to a 529 plan if the gift tax annual exclusion is $16,000? Assume that the donor has no previous contributions to a 529 plan.

$80,000

The following types of income are taxed at more favorable tax rates than the tax rates which apply to ordinary income. 1. qualified dividends 2. long-term capital gains in a taxable (non-qualified) brokerage account 3. corporate bond interest 4. Long-term capital gains distributed from a traditional IRA 5. private activity bond interest

1 and 2 only

which of the following are among the requirements for a valid Subchapter S Corp election? 1. only one class of stock is permitted 2. it must be a domestic corporation 3. shareholders must be US citizens or resident 4. there may be no more than 75 shareholders

1, 2, and 3 only

which of the following are preference items or adjustments for the Alternative Minimum tax? 1. general obligation muni bonds 2. oil and gas percentage depletion 3. depreciation (ACRS and MACRS) 4. the bargain element of nonqualified stock options

2 and 3 only

Which of the following are liquidity rations? 1. debt-to-equity ratio 2. quick ratio 3. fixed asset turnover ratio 4. current ration

2 and 4 only

To satisfy the ownership test for the section 121 exclusion, the home must have been owned and used as a principal residence for at lease ___ of the ___ years preceding the date of sale.

2 and 5

the 1952 publication of "portfolio selection" by Harry Markowitz created a model that promotes diversification among:

Asset classes

All but which of the following are charting techniques used by technical analysts?

CAPM

Which of the following professionals is not permitted to represent a taxpayer when audited by the IRS?

CFP

Tom owns shares in a fast-growing, yet volatile, company. Overall, Tom's position in the stock makes up a sizable portion of his net worth. Tom is worried that his net worth position will fall if the price of the stock were to tumble. Which of the following investment strategies would be appropriate asa the way to hedge Tom's position to minimize risk of a falling stock price?

Purchase put options on the stock

which of the following is/are correct regarding the taxable wage base applied to social security and medicare taxes paid by self-employed individuals? 1. there is no taxable wage base applied to the medicare portion of a self-employed individual's income, and the 2.9% tax must always be paid 2. there is a taxable wage base applied to the social security portion of a self-employed individual's income, above which amount the 12.4% tax does not need to be paid

both 1 and 2

All but which of the following are correct in regarding Parent Loans to Undergraduate Students (PLUS)?

both full time and part time students are eligible

Anna owns two stocks. Stock X has a basis of $45,000 and a market value of $30,000. Stock Y has a basis of $20,000 and a market value of $35,000. Given these facts, which of the following statements is most true if her goal is to reduce federal income taxes and estate taxes, while pursuing her philanthropic inclinations to donate to her favorite charity?

c and d

which of the following is subject to graduated corporate income tax rates and will protect owners from liability beyond the amount they personally invested?

c corporation

Buying a _________ and selling a ________ are both bullish strategies.

call, put

How is the original basis of a newly acquired asset calculated? Assume the asset was acquired at an arm's length transaction from a non-related party.

cost plus expenses of sale, such as sales tax paid, installation costs, freight charges, and commissions incurred in acquiring the asset

Section 325 - Roth plan distribution rules

eliminates the pre-death distribution requirement for Roth accounts in employer plans, effective for taxable years beginning after Dec 31 2023

Which of the following will result if money distributed from a 529 plan is not used to pay for qualifying educational expenses?

gains are taxed as ordinary income, and a 10% is applied

When preparing a client's financial plan, a financial planner is expected to

identify and explain opportunities for tax loss harvesting, deduction clustering, and income shifting

Section 109 - higher catch up limit to apply at age 60, 61, 62 and 63

increases limits to the greater of $10,000 or 50% more than the regular catchup amount in 2025 for individuals w these ages

section 107 - increase in age for required beginning for mandatory distributions

increases the RMD age further to 73 starting Jan 1 2023 and increases to 75 on Jan 1 2033

all but which of the following are underlying assumptions of the CAPM?

investors can borrow and lend at a specific risk-free rate of return equal to zero

how is a loss on the sale of a personal residence treated for tax purposes?

losses are unrecognizable and non-deductible

Taylor is considering different investments to purchase for her traditional IRA. Which of the following would be inappropriate as an investment(s)?

municipal bonds and deferred annuities

Which of the following is/are correct regarding beta? 1. a portfolios beta can be positive or equal to zero, but cannot be negative 2. beta is used to measure the amount og unsystematic risk in an investor's portolio

neither 1 or 2

A hedge fund is a __________ offered fund of securities for wealthy investors. The investment manager is generally paid a __________ fee.

privately, performance

Rebalancing a portfolio generally involves:

reducing (selling) asset classes that have been winners and increasing (buying) asset classes that have been losers to keep a constant balance in the portfolio

Puts are an option to __________ a specified number of shares of stock during a specified period at a specified price. A buyer of a put option expects the price of the underlying stock to __________.

sell, fall

A doctor starting a new medical practice is concerned about limiting her personal liability. She would like to have flow-through taxation and the ability to easily sell interests in her practice in the future. Which of the following entities is most suitable for the doctor to meet her goals?

subchapter s corp

Kristin established a UTMA account as a gift for her nephew. The purpose of the gift is to help him pay for college. Which of the following statements is true?

the nephew may use the money in the account for any purpose after reaching the age of majority