Top 50

Question 1

Client in second marriage + wants control of assets after spouse death

Answer 1

QTIP trust

Question 2

Want to use exemption at first death + keep assets out of surviving spouse estate

Answer 2

Bypass (credit shelter) trust

Question 3

Gift to minor + must qualify for annual exclusion

Answer 3

2503(c) trust

Question 4

Concern child may NOT go to college

Answer 4

Use UTMA or standard trust NOT 529

Question 5

Kiddie tax applies when

Answer 5

Unearned income above threshold taxed at parents rate

Question 6

Investment interest expense deductible against

Answer 6

Portfolio (investment) income only

Question 7

Passive losses offset

Answer 7

Passive income only

Question 8

Real estate professional status allows

Answer 8

Passive losses to offset active income

Question 9

Net capital losses limited to

Answer 9

3

Question 10

Order of capital gain/loss netting

Answer 10

ST vs ST then LT vs LT then combine

Question 11

Step-up in basis occurs at

Answer 11

Death (FMV basis)

Question 12

Assets that are IRD do NOT get step-up

Answer 12

Qualified plans / IRAs / deferred income

Question 13

1031 exchange results in

Answer 13

Carryover basis (deferred gain)

Question 14

Wash sale rule applies when

Answer 14

Same/similar security within 30 days

Question 15

Municipal bond interest is

Answer 15

Tax-free federal (possibly state)

Question 16

TIPS create

Answer 16

Phantom income

Question 17

Zero coupon bonds create

Answer 17

Phantom income

Question 18

STRIPS have

Answer 18

Highest interest rate risk (long duration)

Question 19

Duration measures

Answer 19

Sensitivity to interest rate changes

Question 20

Higher duration means

Answer 20

Higher interest rate risk

Question 21

Dollar-weighted return considers

Answer 21

Cash flows (IRR)

Question 22

Time-weighted return removes

Answer 22

Impact of cash flows

Question 23

Beta measures

Answer 23

Systematic risk vs market

Question 24

Standard deviation measures

Answer 24

Total risk

Question 25

Sharpe ratio measures

Answer 25

Return per unit of total risk

Question 26

Treynor ratio measures

Answer 26

Return per unit of systematic risk

Question 27

Alpha measures

Answer 27

Excess return over expected

Question 28

Efficient Market Hypothesis (semi-strong)

Answer 28

All public info priced in

Question 29

Index funds align with

Answer 29

Efficient market theory

Question 30

Emergency fund rule

Answer 30

3–6 months expenses (more if unstable income)

Question 31

Disability insurance most important feature

Answer 31

Definition of disability

Question 32

Long-term care covers

Answer 32

Extended care beyond acute medical

Question 33

Medicare covers

Answer 33

Short-term/acute care (NOT long-term)

Question 34

Medicaid covers

Answer 34

Long-term care for low-income

Question 35

COBRA allows

Answer 35

Continuation of employer health coverage

Question 36

HSA requires

Answer 36

High deductible health plan

Question 37

FSA rule

Answer 37

Use-it-or-lose-it (with possible grace)

Question 38

Section 125 plan allows

Answer 38

Pretax benefit contributions

Question 39

FICA taxes fund

Answer 39

Social Security + Medicare

Question 40

FUTA taxes fund

Answer 40

Unemployment insurance

Question 41

Self-employment tax covers

Answer 41

Both employer + employee FICA

Question 42

Alimony (post-2018)

Answer 42

NOT deductible / NOT taxable

Question 43

Child support is

Answer 43

NOT deductible / NOT taxable

Question 44

Estate tax marital deduction applies to

Answer 44

Spouse transfers (unlimited)

Question 45

Gift tax annual exclusion

Answer 45

Applies per donee per year

Question 46

3-year rule includes in estate

Answer 46

Gift tax paid + life insurance transfers

Question 47

General power of appointment causes

Answer 47

Inclusion in estate

Question 48

HEMS standard limits

Answer 48

Access to trust principal

Question 49

Tenancy by entirety requires

Answer 49

Married couple ownership

Question 50

Joint tenancy includes

Answer 50

Right of survivorship

Question 51

Tenancy in common allows

Answer 51

No survivorship / divisible ownership

Question 52

Callable bond risk

Answer 52

Reinvestment risk

Question 53

Put option used to

Answer 53

Protect downside (insurance)

Question 54

Call option used to

Answer 54

Leverage upside

Question 55

Covered call generates

Answer 55

Income but caps upside

Question 56

Protective put provides

Answer 56

Downside protection

Question 57

Short selling profits when

Answer 57

Price declines

Question 58

Cap rate formula

Answer 58

NOI / Property value

Question 59

Higher cap rate implies

Answer 59

Higher risk / lower value

Question 60

NPV > 0 means

Answer 60

Accept investment

Question 61

IRR equals

Answer 61

Discount rate where NPV = 0

Question 62

Rule for annuity taxation (non-qualified)

Answer 62

LIFO (earnings first)

Question 63

Life insurance death benefit is

Answer 63

Income tax-free

Question 64

MEC distributions taxed as

Answer 64

LIFO + penalty if under 59.5

Question 65

Replacement of life insurance requires

Answer 65

Disclosure + suitability