CFP ALL Flashcards
2032A
Special Use Valuation
- real estate used in farming or business
- 50% AGE
- subject to recapture is disposed or no longer qualifying within 10 years
Section 303
- close held corporation
- 35% AGE
Section 6166
- closely held business
- deferred payments of estate tax
- deferred up to 5 years, then payable in up to 10 annual installments
- 35% AGE
Estate Tax Calculation
Gross estate
- minus expenses, debts & losses: claims on estate, mortgage due, admin expenses, funeral costs to get AGE
Adjusted Gross Estate
- minus allowable deductions: charitable deductions, marital deduction, state death taxes
Taxable Estate
- add adjusted taxable gifts
- subtract gift taxes paid in last 3 years
then remove applicable credit
to get to estate tax liability
HSA Overfunding Tax
6% of the overfunding amount
option in the money
exercise price > market price
put option out of the money
exercise price < market price
estate planning technique to sell business to a family member where payments cease at death
SCIN or private annuity
debt to income ratio
36% of monthly gross income
housing cost ratio
28% of monthly gross income
SIMPLE IRA
- no ADP/ACP testing
- less than 100 employees (making 5k or more of commission)
- no after tax contributions
- can withdraw for higher education payment but no loans
- can’t have a qualified plan and a SIMPLE
- requires employer contributions each year
- maximum match is 3%, can vary 2 out of last 3 years
- subject to top heavy rules
- contributions vest immediately
- if removed prior to 2 years of service, 25% penalty plus tax rate
UBTI
unrelated business taxable income
- Dividends, interest, and royalties are excluded from the calculation of UBTI
- Employer securities purchased by an ESOP with borrowed funds exempt
Defined Benefit Pension Plan
- require employers to contribute at least 2% or average compensation times years of service up to 20%
- offset method for SS integration
- usually use the employees top 3 consecutive years of earnings up to 290k
- only pension that requires PBGC
Viatical Settlement
- physician must write that person is expected to die within 24 months
- proceeds tax free
- taxable to the settlement company that purchases said insurance from terminally ill person
Non qualified plans
- SERP
- tophat
Qualified Plans
- 401k
- profit sharing
- ESOP
- stock bonus plan
Rental Property Deduction Rules
- owner’s use for personal can’t exceed the longer of 14 days or 10% of the rental days
- loss reported on Schedule E if deductible
Section 179
- depreciable tangible personal property that is purchased for business or trade
- max deduction $1,050,000, amount is reduced dollar for dollar for acquisition amounts above $2,620,000 placed into service during 2021
- max claimed cannot exceed income in that year, rest is carryover
- example: new office desk, if vehicle must be over 6,000 pounds not under
- cost of property may be deductible vs depreciated if certain conditions met
ACP
- required for plans that provide employer matching or employee after-tax contributions
ADP
- required for plans that allow employee elective deferral contributions
Allow in-service withdrawals
- profit sharing
- 401k
- SEP
Student loan interest
only 2500 is deductible
Bond yield comparisons
Premium bonds: CR > CY > YTM
Par bonds: CR = CY = YTM
Discount bonds: CR < CY < YTM
Social security quarters
for every $1470 earnings that have SS taxed