CFP - Final Push Flashcards
Who establishes and maintains margin regulation requirements?
The Fed
Are retirement accounts of parents included in FAFSA calculations?
No
Are retirement accounts of students included in FAFSA calculations?
No
Is personal property included in FAFSA calculations?
No
What is the amount allowed for the American Opportunity Tax Credit?
Per child:
100% of the first $2,000 of qualified college expenses
25% of the next $2,000 for a max of $2,500
What is the result of fraud on an insurance application?
Misstated age: reduced benefit pro rated for the amount of premium paid
Anything else: rescinded
Is the interest expense on borrowed money for a margin account, investment loan, or line of credit to earn investment income deductible?
Yes
Do both spouses have to participate in a qualified plan to be affected by IRA deductibility phaseout rules?
No,
The participating spouse uses the regular phaseout amount
The non-participating spouse uses the Spousal IRA phaseout numbers
Options payoffs are:
Futures payoffs are:
Symmetrical or Asymmetrical?
Options: Asymmetrical
Futures: Symmetrical
Surviving spouse with child-in-care benefits terminate when the child reaches age…
16
Which comes first when determining index annuity returns?
Annual cap %
or
Participation limit?
Participation limit first, then annual cap %
What is the formula for insurance below the required coinsurance amount?
Amount of actual insurance / Amount required (i.e. 80%)
= New coinsurance percentage covered
What is the formula for basis with gift tax included?
Basis +
(FMV - basis) / (FMV-annual exclusion) x gift tax paid
The capital gain rate for collectibles is…
28%
Medical expenses are only deductible to the extent that they exceed…
7.5% of AGI
Section 121:
If you have owned and lived in a residence for more than _____ years, the proceeds from the sale of the residence is excluded from gross income to certain limits.
2
Section 121 sale of a personal residence:
Max exclusion for single
Max exclusion for MFJ
$250,000 single
$500,000 MFJ
If one spouse meets the 2 year rule for Section 121 sale of a personal residence and the other does not, how much is excluded from income?
Spouse that qualifies: $250,000
Spouse that doesn’t:
Months living at the residence / 24 x $250,000
Are dividends paid by a company deductible?
No
Personal bad debt is recognized as…
Short term capital loss
Which happens as soon as you sell something?
Recognized or realized?
Realized
Which happens when it is applied to your taxes?
Recognized or realized?
Recognized
What is the standard deduction for kiddie tax?
Earned income + $350
limited to $12,000
For gift loans greater than $10,000 and less than or equal to $100,000, no interest is imputed if the borrower’s net investment income for the year does not exceed $______.
$1,000
What business can deduct passive losses against active?
A closely-held C corporation that is not a personal service corporation - passive losses may be used to offset active, but not portfolio income.
If a security becomes worthless during the tax year, how is the loss recognized?
The loss is treated as if it occurred on the last day of the tax year.
Under the Employer’s Educational Assistance Program, an employer can reimburse an employee’s tuition, enrollment fees, books, supplies, and equipment up to $_______ per year
$5,250
What is the formula for coefficient of variance?
Standard Deviation / Return
What is the employee and employer max for SIMPLE IRAs?
$12,500 employee
$5,500 employer
$18,000 total
Private placements are limited to _____ unaccredited investors and ______ accredited investors.
35
Unlimited
Are VEBA benefits tax exempt?
Yes, if they meet requirements of Section 501(c)(9)
Transferring a life insurance policy on own life (to beneficiary or ILIT) removes the death benefit from the gross estate if they live more than ______ years afterwards.
3
If the spouse is not a U.S. citizen, only the first $_______ of annual present interest gifts to them is exempt from gift tax.
$152,000
What is the max Lifetime Learning Credit??
20% of qualified expenses up to $10,000 = $2,000 max credit PER FAMILY
Which credit is family based and which is individual based?
Lifetime Learning Credit - family
American Opportunity Credit - individual
Can a taxpayer take both Lifetime Learning Credit and American Opportunity Credit for the same student?
No, but they can if multiple dependents are students
What are the underpayment of estimated tax rules for prior year AGI less than $150,000?
Lesser of:
90% of current year tax liability
and
100% of prior year tax liability
What are the underpayment of estimated tax rules for prior year AGI greater than $150,000?
Lesser of:
90% of current year tax liability
and
110% of prior year tax liability
Accredited investors:
Income more than $_______ (S) $_______ (MFJ)
Net worth more than $___________
$200,000
$300,000
$1,000,000
What is the information ratio?
Alpha divided by standard deviation
Special use valuation (2032A) is for farms or closely held business that has property that makes up _____% of the adjusted value of the gross estate and real property is _____%. The decedent must have been a material participant for ____ of the last _____ years.
50%
25%
5
8
If special use property (Section 2032A) is disposed of to a nonfamily member or the property discontinues its qualified use withing _____ years of the decedents death, all or part of the estate savings may be captured - exceptions exist if the heir dies or goes bankrupt.
10
Deferred payment of estate tax (section 6166) can occur if the value of the closely held business exceeds ____% of the value of the adjusted gross estate.
35%
Deferred payment of estate tax (section 6166) allows estate tax to be deferred for _____ years, then paid in _____ annual installments.
5
10
What is the benefit of a stock redemption (section 303)?
The estate can redeem the decedent’s shares - stepped up then sold as a capital gain rather than ordinary income
What are the 3 conditions that must be met for a section 303 stock redemption?
- Shares must be included in decedent’s estate
- Value of the stock must be more than 35% of AGE
- Redemption proceeds cannot be more than federal and state death taxes plus deductible funeral and administrative expenses
According to the 50/40 test, defined benefit pension plans must benefit no fewer than the lesser of:
50 employees
40% or more of all non-excludable employees
No more than ____% of the employer contributions to a qualified plan can be used to purchase whole life insurance, and no more than _____% can be used to by term or universal.
50% whole
25% term/universal
For defined benefit plans, the life insurance death benefit cannot exceed what?
100x the expected monthly benefit for the employee
Medicaid look back is…
60 months
Loss property: Gain basis & holding period
Donor’s basis, donor’s holding period
Loss property: Loss basis & holding period
FMV at the time of gift, holding period begins at time of gift
