A high-income taxpayer is considering selling appreciated investment property. Which planning observation most accurately addresses the net investment income tax under current federal law?
A. The tax applies to gross investment receipts without subtracting basis or allocable investment deductions.
B. The tax applies to the lesser of net investment income or the applicable MAGI excess.
C. The tax applies to the greater of net investment income or the applicable MAGI excess.
D. The tax replaces regular income tax on investment income once the MAGI threshold is exceeded.
Source: 26 USC 1411(a), (b), and (c) -- https://uscode.house.gov/view.xhtml?path=/prelim@title26&edition=prelim
Which transfer can generally occur without income inclusion under the ABLE rollover rules?
A. A distribution to any noneligible stranger if the recipient promises to spend it on disability services.
B. A transfer from an ABLE account to the owner's unrestricted employer payroll account.
C. A qualifying ABLE-to-ABLE rollover for the same eligible individual or an eligible family member.
D. An unlimited cash withdrawal for nonqualified expenses made within sixty days of the original contribution.
Source: 26 USC 529A(c)(1)(C), ABLE rollover distributions -- https://uscode.house.gov/view.xhtml?path=/prelim@title26&edition=prelim
A partnership with a section 754 election distributes property and recognizes a loss to the distributee under section 731(a)(2). How can section 734(b) affect remaining partnership assets?
A. Reduce every partner's outside basis to zero so the loss cannot be deducted twice.
B. Convert the distributee's recognized loss into deductible wage expense for the partnership.
C. Increase the basis of remaining partnership property by the recognized loss, allocated under section 755.
D. Dissolve the partnership because recognition of any section 731 loss terminates its tax existence.
Source: 26 USC 734(b)(1)(B) and 755, distribution basis adjustment -- https://uscode.house.gov/view.xhtml?path=/prelim@title26&edition=prelim
A partner personally assumes a larger share of partnership recourse debt. What is the general outside-basis effect?
A. Ignore the assumption because partnership recourse debt never affects a partner's outside basis.
B. Treat the assumption as dividend income because the partnership relieved other partners of personal liability.
C. Treat the increased share as a deemed cash distribution that reduces the partner's outside basis.
D. Treat the liability-share increase as a deemed money contribution that generally increases outside basis.
Source: 26 USC 752(a), increase in partner liabilities -- https://uscode.house.gov/view.xhtml?path=/prelim@title26&edition=prelim
A decedent's estate is in its first two taxable years. How does the estimated-tax regime generally treat it?
A. The estate must make monthly estimated payments throughout its first two taxable years.
B. The estate generally owes no estimated income-tax payments for taxable years ending within two years after death.
C. Beneficiaries automatically make all estimated payments because the estate cannot be an income-tax taxpayer.
D. The estate is permanently exempt from income tax because administration began within two years of death.
Source: 26 USC 6654(l)(2), estates and estimated tax -- https://uscode.house.gov/view.xhtml?path=/prelim@title26&edition=prelim
