California Bar Journal
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California Bar Journal

The State Bar of California


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Front Page - November 2001
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News / News Briefs
Applicants sought to oversee bar's diversion program
Let's have another cup of - legal advice
Foundation leads students to capital
Six honored for professional service
Warwick, six others named to California Judicial Council
Several thousand lawyers suspended for failing to pay dues, certify MCLE
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Trials Digest
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From the President - Remembering the fallen
The rule of law is our strongest weapon
Pro bono work is lawyers' duty
Letters to the Editor
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Law Practice - Success: The top eight requirements
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You Need to Know
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MCLE Self-Study
Planning for education expenses
Self-Assessment Test
MCLE Calendar of Events
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Ethics Byte - Lawyers move on in usual way despite disaster
Former city councilman spent his son's settlement
Attorney Discipline
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Public Comment


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Self-Assessment Test
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Answer the following questions after reading the MCLE article on planning for education expenses. Use the answer form provided to send the test, along with a $20 processing fee, to the State Bar. Please allow at least eight weeks for MCLE certificates to reach you in the mail.

1. Payment of a student's tuition at an accredited university by another individual is not a taxable gift if made directly to the university.

2. Payments to a child for room and board expenses may qualify for the annual $10,000 annual gift tax exclusion.

3. Under the 2001 Act, a taxpayer may deduct a limited amount of a child's qualified education expenses irrespective of the taxpayer's gross income.

4. Early distributions from an IRA to pay for a grandchild's tuition are subject to the early distribution penalty assessed under IRC 72.

5. Taxable income of a CUTMA account for a 15-year-old is taxed to the beneficiary at the beneficiary's rates.

6. Termination of a CUTMA account created as a lifetime gift can be delayed until the beneficiary reaches age 21 if delayed distribution age is designated upon the creation and funding of the account.

7. A donor to a CUTMA account can limit distributions to payment of a beneficiary's education expenses.

8. CUTMA accounts created and funded by a parent who serves as the custodian of the account may be included in their estate for estate tax purposes if he or she dies before the account is exhausted or terminates.

9. Transfers to CSP accounts and Education IRAs are completed gifts for federal gift tax purposes and are generally not included in the donor's estate for estate tax purposes.

10. Federal law prohibits more than one individual to contribute to a CSP account established for a single designated beneficiary.

11. The maximum amount that can be contributed to a CSP account for a single beneficiary in a single year is $2,000.

12. Income earned and accumulated within a CSP account or Educa-tion IRA account is not generally subject to current income.

13. If distributions from a CSP account are applied in 2002 for a child's tuition, books, fees and limited room and board expenses, the distributions may be excludable from taxable income for federal income tax purposes.

14. Distributions after 2001 from Education IRAs for private secondary school tuition may be excludable from taxable income for federal income tax purposes.

15. Distributions from CSP accounts for private secondary school tuition may be excludable from taxable income for federal income tax purposes.

16. After 2001, it is possible to transfer a CSP account balance to another CSP account for the same beneficiary under another qualified tuition assistance program.

17. It is possible to change the designated beneficiary of a CSP account to a sibling, spouse, child or grandchild of the original account beneficiary.

18. CSP accounts can be pledged by the account owner to secure a loan obtained by the account owner.

19. CSP accounts and Education IRAs both allow the account owner the ability to actively manage day-to-day investments within the account.

20. Contributions made to Educa-tion IRAs and CSP accounts are deductible for federal income tax purposes.