What is a taxpayer’s most advantageous tax benefit?

A taxpayer’s most advantageous tax benefit is: a depletion allowance.

Which of the following choices would generate the largest first year deductions in an oil and gas exploratory drilling program?

Intangible drilling costs (IDCs) would be the largest deduction in an oil and gas exploratory drilling program. These are also known as a wildcat program.

Which of the following are potential benefits associated with a real estate direct participation program?

Which of the following are potential benefits associated with a real estate direct participation program? For real estate programs, both deductions (from mortgage interest expenses and depreciation) and credits (for certain types of programs) are potential benefits.

Which of the following is the most suitable buyer for a variable life insurance policy?

The MOST appropriate buyer(s) for a variable life insurance policy is/are: … A person who is knowledgeable about investments may be a candidate for variable life insurance because common stock and bonds are the foundation of the policy.

What do DPPs provide?

A direct participation program (DPP) is a pooled entity that offers investors access to a business venture’s cash flow and tax benefits. Also known as a “direct participation plan,” DPPs are non-traded pooled investments in real estate or energy-related ventures over an extended time frame.

Which of the following direct participation programs has the highest profit potential?

Although it is considered the riskiest type of oil and gas program due to the high rate of failure, if oil is found, it has the highest profit potential.

Which of the following choices is found in a variable annuity but not in a mutual fund?

A typical variable annuity offers three basic features not commonly found in mutual funds: tax-deferred treatment of earnings; a death benefit; and. annuity payout options that can provide guaranteed income for life.

What is the greatest investment risk in a variable life insurance policy?

The greatest risk in a variable life insurance policy is the risk of the investments. The insurance company doesn’t guarantee any rate of return and doesn’t offer protection for investment losses. Like any investment, the cash value component of a variable life insurance policy comes with risk.

What is variable life insurance What are the advantages and disadvantages of variable life policies How can individuals avoid the high fees of variable life insurance?

An advantage of variable life policies is​ that: policyholders have flexibility in making their own investments. Individuals avoid the high fees of variable life insurance​ by: purchasing​ lower-cost term insurance and investing the cost difference.

Which of the following is an advantage of buying a variable annuity rather than a similar mutual fund?

The main advantage of buying a variable annuity rather than a similar mutual fund is that variable annuities offer tax-deferred growth.

When would a variable annuity be most suitable for a client?

A variable annuity would be MOST suitable for which of the following customers? A variable annuity is most suitable for an investor seeking long-term, tax-deferred income for retirement. A tax-deferred investment, as with a variable annuity, becomes more advantageous for an investor with a higher tax bracket.

Do variable annuities have greater potential for higher returns but also present higher risk to the investor?

Variable annuities offer the possibility of higher returns and greater income than fixed annuities, but there’s also a risk that the account will fall in value.

Which of the following is an advantage of buying a variable annuity rather than a similar mutual fund quizlet?

Which of the following is an advantage of buying a variable annuity rather than a similar mutual fund? You don’t have to pay taxes until money is taken out.

Which of the following characteristics of a variable annuity?

Which of the following is a characteristic of a variable annuity? Variable annuities involve underlying equity investments in a separate account. How does an indexed annuity differ from a fixed annuity? An immediate annuity has a single premium.

What is a variable annuity contract?

A variable annuity is a contract between you and an insurance company, under which the insurer agrees to make periodic pay- ments to you, beginning either immediately or at some future date. You purchase a variable annuity contract by making either a single purchase payment or a series of purchase payments.

Which statement is true about variable annuities?

Which statements are TRUE about variable annuities? The best answer is C. There is no tax deduction for contributions made to a variable annuity contract. The major advantage is the tax-deferred build-up of earnings in the separate account.

Which statement is true regarding variable annuity contracts?

Which statement is TRUE regarding variable annuity contracts? The best answer is D. In a variable annuity contract, the principal amount is never guaranteed. The principal value may increase or decrease, depending on the performance of the separate account.

Why would a client purchase a mutual fund within a variable annuity?

It offers more freedom to choose where and how much money to invest. (As opposed to a “fixed annuity” in which the insurance company decides how the funds will be invested in exchange for a specific amount of return.) The funds might be invested in stocks, mutual funds or bonds, or a mix of all three.

Which statements are true about variable annuities contributions are tax deductible?

Variable annuity contributions are not tax-deductible. Earnings in the account build tax-deferred. When distributions are taken, tax is due on the portion that represents the tax-deferred build-up. The portion that represents the original contribution (already taxed dollars) is returned without any further tax due.

What is the best definition of an annuity unit?

An annuity unit is an accumulation unit for which the annuitant has annuitized their contract. This is a sub-account of the retiree’s total accumulated annuity. These units represent a fixed share of ownership of the insurer’s accounts portfolio and are different in key ways from mutual fund shares.

Which statement is true regarding a variable annuity offering Gmib?

Which statement is TRUE regarding a variable annuity offering a GMIB? A “GMIB” is a Guaranteed Minimum Income Benefit. It is an optional rider offered by many variable annuity contracts.

Are variable annuity contributions tax deductible?

Nonqualified variable annuities don‘t entitle you to a tax deduction for your contributions, but your investment will grow tax-deferred. When you make withdrawals or begin taking regular payments from the annuity, that money will be taxed as ordinary income.

How are variable annuities taxed?

Answer: Variable annuities aren‘t taxed until you withdraw the money. … You’ll have to pay income taxes on all of the earnings in one year – in your case, $60,000 of the $210,000. But if you withdraw some of the money and keep the rest growing in the account, your first withdrawals will be considered taxable earnings.

How are annuities given favorable tax treatment?

Unlike most investments, an increase in the value of an annuity from interest is not currently taxable. Generally, annuity funds are allowed to grow tax deferred until they’re distributed, at which time the owner will pay ordinary income tax on all gains.