SEFR MCQ || GUARANTEED PASS.
For which of the following types of employer-sponsored retirement plans does the employer bear
the investment risk?
A. Defined benefit plan
B. Defined contribution plan
C. Traditional Section 401(k) plan
D. Roth Section 401(k) plan correct answers Choice "A" is correct. With a defined benefit plan,
the benefit is defined by contract (plan trust agreement), so the employer bears the investment
risk. If sufficient funds are not available to meet the promised retirement benefit, the employer
will have to use company funds to fulfill the promised benefits.
Which of the following methods for controlling risk is the most suitable for risks that involve
high loss severity and low loss frequency?
A. Risk retention
B. Risk reduction
C. Risk transfer
D. Risk avoidance correct answers Choice "C" is correct. The most suitable method for
controlling risks that involve high loss severity and low loss frequency is transferring or sharing
the risk (usually with an insurance company).
Unrelated business income (UBI) is:
A. Derived from an activity that constitutes a trade or business, not regularly carried on, and
substantially related to the organization's tax-exempt purposes.
B. Derived from an activity that constitutes a trade or business, regularly carried on, and not
substantially related to the organization's tax-exempt purposes.
C. Derived from an activity that constitutes a trade or business, regularly carried on, and
substantially related to the organization's tax-exempt purpose.
D. Derived from an activity that constitutes a trade or business, not regularly carried on, and not
substantially related to the organization's tax-exempt purposes. correct answers Choice "B" is
correct. UBI is gross income less related business deductions that is derived from an activity that
constitutes a trade or business, regularly carried on, and not substantially related to the
organization's tax-exempt purposes.
, Is a niece a related party under S267? correct answers No.
Brothers and sisters (including half)
Spouses
Ancestors and lineal descendants (father, son, grandfather)
Entities that are more than 50 percent owned, directly or indirectly, by individuals, corporations,
trusts, and/or partnerships.
Controlled groups (any two entities that are both owned more than 50 percent by the same party)
HSA contributions summary correct answers Choice "D" is correct. Beth can deduct the $4,000
contributions to her HSA as an above-the-line adjustment for AGI. If the HSA was provided
through her employer, the contributions could have been taken out of her salary pretax. A
taxpayer can deduct the entire amount of the contributions to the HSA for the year, up to the
maximum limitation amount, regardless of how much is spent on qualified medical expenses.
Any unused contributions roll over to future years.
BIG tax years correct answers The built-in gain is subject to the BIG tax if it is sold or
transferred within five years of the effective date of the S election
Which of the following is a controlled foreign corporation (CFC)?
A. A foreign corporation whose stock is 10 percent owned by U.S. shareholders.
B. A U.S. corporation whose stock is 10 percent owned by foreign shareholders.
C. A U.S. corporation whose stock is 70 percent owned by foreign shareholders.
D. A foreign corporation whose stock is 70 percent owned by U.S. shareholders. correct answers
Choice "D" is correct. A CFC is a foreign corporation whose stock is more than 50 percent
owned by U.S. shareholders.
Which of the following type of gift is a present interest gift?
A. Present interest without ascertainable value
B. Reversion interest
For which of the following types of employer-sponsored retirement plans does the employer bear
the investment risk?
A. Defined benefit plan
B. Defined contribution plan
C. Traditional Section 401(k) plan
D. Roth Section 401(k) plan correct answers Choice "A" is correct. With a defined benefit plan,
the benefit is defined by contract (plan trust agreement), so the employer bears the investment
risk. If sufficient funds are not available to meet the promised retirement benefit, the employer
will have to use company funds to fulfill the promised benefits.
Which of the following methods for controlling risk is the most suitable for risks that involve
high loss severity and low loss frequency?
A. Risk retention
B. Risk reduction
C. Risk transfer
D. Risk avoidance correct answers Choice "C" is correct. The most suitable method for
controlling risks that involve high loss severity and low loss frequency is transferring or sharing
the risk (usually with an insurance company).
Unrelated business income (UBI) is:
A. Derived from an activity that constitutes a trade or business, not regularly carried on, and
substantially related to the organization's tax-exempt purposes.
B. Derived from an activity that constitutes a trade or business, regularly carried on, and not
substantially related to the organization's tax-exempt purposes.
C. Derived from an activity that constitutes a trade or business, regularly carried on, and
substantially related to the organization's tax-exempt purpose.
D. Derived from an activity that constitutes a trade or business, not regularly carried on, and not
substantially related to the organization's tax-exempt purposes. correct answers Choice "B" is
correct. UBI is gross income less related business deductions that is derived from an activity that
constitutes a trade or business, regularly carried on, and not substantially related to the
organization's tax-exempt purposes.
, Is a niece a related party under S267? correct answers No.
Brothers and sisters (including half)
Spouses
Ancestors and lineal descendants (father, son, grandfather)
Entities that are more than 50 percent owned, directly or indirectly, by individuals, corporations,
trusts, and/or partnerships.
Controlled groups (any two entities that are both owned more than 50 percent by the same party)
HSA contributions summary correct answers Choice "D" is correct. Beth can deduct the $4,000
contributions to her HSA as an above-the-line adjustment for AGI. If the HSA was provided
through her employer, the contributions could have been taken out of her salary pretax. A
taxpayer can deduct the entire amount of the contributions to the HSA for the year, up to the
maximum limitation amount, regardless of how much is spent on qualified medical expenses.
Any unused contributions roll over to future years.
BIG tax years correct answers The built-in gain is subject to the BIG tax if it is sold or
transferred within five years of the effective date of the S election
Which of the following is a controlled foreign corporation (CFC)?
A. A foreign corporation whose stock is 10 percent owned by U.S. shareholders.
B. A U.S. corporation whose stock is 10 percent owned by foreign shareholders.
C. A U.S. corporation whose stock is 70 percent owned by foreign shareholders.
D. A foreign corporation whose stock is 70 percent owned by U.S. shareholders. correct answers
Choice "D" is correct. A CFC is a foreign corporation whose stock is more than 50 percent
owned by U.S. shareholders.
Which of the following type of gift is a present interest gift?
A. Present interest without ascertainable value
B. Reversion interest
