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64 multiple-choice questions and 85 flashcards on Planning, about 17% of the CPA TCP bank. Every one carries a written rationale.
Planning is one of 5 chapters in CoStudy's CPA — Tax Compliance & Planning (TCP) [Discipline] bank, and it holds 64 of the bank's 385 multiple-choice questions — roughly 17% of the total. That proportion is not arbitrary: chapters follow the certifying body's published exam outline, and the number of questions in each is set by that domain's published weight, so the share of your practice time this chapter takes matches the share of the real exam it accounts for.
Studying by chapter is worth doing once you have a diagnostic score. A single overall percentage tells you whether you are close; it does not tell you which domain is dragging. Working a weak chapter in isolation, and re-testing it in isolation, is the fastest way to move a score that has stalled — and it is why the mock exams in CoStudy report by domain rather than as one number.
3 questions drawn from this chapter, with the full rationale shown — the controlling principle behind the right answer, and why each wrong option tempts and fails.
The tax-planning bunching strategy for itemized deductions works by:
Answer: D — Concentrating deductions into one year to exceed the standard deduction
A) Even spreading is what bunching is designed to defeat. D) Correct — bunch into one year, take standard in off years. C) Deferral until retirement is unrelated. B) The whole point is to itemize in the bunch year.
A family's irrevocable trust names an independent trust protector with the power to remove and replace the trustee and to modify certain administrative provisions, but no power over beneficial enjoyment of trust assets. This trust protector role primarily serves to:
Answer: A — Add flexibility to an otherwise rigid irrevocable trust structure by allowing certain adjustments over time, generally without causing the grantor to be treated as retaining impermissible control
A) Correct — a trust protector, when granted powers like trustee removal/replacement and limited administrative modification authority (as opposed to powers over beneficial enjoyment or economic benefit), is specifically designed to add flexibility and adaptability to an irrevocable trust over time, generally without the grantor being treated as having retained impermissible control that would jeopardize the trust's irrevocable, estate-tax-excluded status. B) Incorrect — appointing a trust protector doesn't convert an irrevocable trust into a revocable one; the trust retains its irrevocable character. C) Incorrect — a trust protector role is typically distinct from and supplementary to the trustee's role, not a replacement for having a trustee altogether. D) Incorrect — a properly structured trust protector role (limited to administrative matters, not beneficial enjoyment) generally does NOT by itself trigger estate tax inclusion for the grantor.
A nonresident alien (NRA) who has never been a US citizen or resident dies owning US real estate, foreign real estate, and stock in a US corporation. Regarding US estate tax exposure, her taxable estate for US purposes generally includes:
Answer: B — Only her US-situs assets (the US real estate and the US corporation stock), NOT her foreign real estate, subject to a much smaller exemption (as low as $60,000) than a US citizen/resident would receive
A) Incorrect — this is precisely the key distinction; NRAs are NOT taxed on worldwide assets the way US citizens/residents are. B) Correct — an NRA's US estate tax exposure is limited to US-SITUS assets only (here, the US real estate and the US corporation stock, but NOT the foreign real estate), and NRAs receive a dramatically smaller exemption (as low as $60,000, absent treaty relief) compared to the multi-million-dollar exemption available to US citizens and residents. C) Incorrect — NRAs are NOT entirely exempt; they face real US estate tax exposure specifically on their US-situs assets. D) Incorrect — this reverses the rule; US-situs assets ARE subject to US estate tax for an NRA, while foreign assets generally are NOT.
4 cards from the 85 in this chapter.
ILIT Crummey withdrawal mechanics?
Trust beneficiaries are given a temporary (typically 30-day) right to withdraw contributions, converting an otherwise future-interest gift into a present-interest gift eligible for the annual exclusion.
Intentionally defective grantor trust (IDGT) power to substitute?
A §675(4) 'swap power' (grantor can substitute assets of equivalent value) causes grantor trust income tax status WITHOUT causing estate inclusion — the key mechanism enabling IDGT sale transactions.
Income bunching strategy?
Concentrate deductible items (charitable, medical) into one year to exceed standard deduction, then take standard deduction in off years.
Conservation easement charitable deduction?
Donating a perpetual restriction on land use (development rights) to a qualified organization generates a deduction for the easement's value, but syndicated conservation easement transactions claiming inflated valuations have been a major IRS enforcement priority (listed transaction status).
These are a sample. The full Planning chapter runs 149 items with per-chapter progress tracking, on the web and in the iOS app.