Question 1

Phil Anthropy wrote his cousin a $15,000 check to pay for medical bills the cousin had accumulated. He also distributed $5,000 checks to three nephews who were in college, and gave his mother a check for $12,000. Have Phil’s actions triggered any gift taxes?

Options :

A : Yes, $19,000 of his total distributions is subject to the gift tax.

B : Yes, $2,000 of his total distributions is subject to the gift tax.

C : Yes, $7,000 in distributions is subject to the gift tax.

D : No. None of Phil’s distributions is subject to the gift tax.

Answer: B

Question 2

stion No: 159 In 2004, your Uncle Oscar purchased 300 shares of Hasbro, Inc. for $19 a share. Uncle Oscar died earlier year and left his Hasbro stock to you. The stock was selling for $44 on the day he died, but by the time you learned that you were the beneficiary of the stock, the price was $47. What is your cost basis in Hasbro?

Options :

A : $19

B : $44

C : $47

D : $28

Answer: B

Question 3

Which of the following statements regarding a Coverdell Education Savings Plan (ESA) are true? I. There are income limitations regarding those who may contribute to an ESA. II. There is a maximum annual aggregate amount that can be contributed to a single beneficiary’s account. III. Contributions to an ESA are tax deductible. IV. The monies must be used prior to the beneficiary’s 30th birthday for education-related expenses in order to avoid paying both taxes and a penalty.

Options :

A : I and II only

B : I and III only

C : I, II, and IV only

D : I, II, III, and IV

Answer: C

Question 4

The total of a mutual fund’s front-end load, rear-end load, and 12b-1 fees may not exceed:

Options :

A : 10.0% of the fund’s offer price.

B : 10.0% of the fund’s net asset value.

C : 8.5% of the fund’s offer price.

D : 8.5% of the average annual net assets of the fund.

Answer: C

Question 5

All government bonds and the majority of corporate bonds are traded:

Options :

A : on the floor of the NYSE.

B : via electronic communication networks (ECNs).

C : on regional exchanges.

D : in the over-the-counter market.

Answer: D

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