Cfp March 2024 Flashcards

Question

Who is a deduction versus a credit worth more to?

Answer 1

A deduction is worth more if you are in a higher tax bracket (Katie and me) a credit is worth more if you are in a lower tax bracket (Laura).

Answer 2

DONT have to cover FICA for these kids. Ie a sole proprietor business.

Answer 3

Traditional DB CASH balance $275,000 annual benefit limit. Employer takes the risk.

Answer 4

Money purchase Target benefit Profit sharing with 401(k) provisions Stock bonus ESOP $345,000 is maximum compensation considered. $69,000 annual limit contribution. Employee takes the risk.

Answer 5

Traditional DB pension Cash balance Money purchase plan Target benefit plan All require Mandatory annual contributions from employer

Answer 6

Profit sharing plan with 401(k) provisions Stock bonus (ESOP) Must have substantial and recurring profits. Pretend a profit sharing plan is the main house and the 401(k) is the three seasons room.

Answer 7

All are Included IN USING 50% and 85% AGI rules 50% @ 25k 32k 85@ 34k 44k Remember use 1/2 of this benefit when calculating AGI not full benefit

Answer 8

444 S 401k 403b 457 Simple (and Sar Sep)

Answer 9

Chois Amazon old and young smokers/workers example. Favors younger workers Up to 25% employer deduction Fixed contributions Stable cf needed DC type of plan… remember only DB are CB are DB… 2 of the 6. All others are DC, including money purchase.

Answer 10

DC plan featuring FLEXIBLE employer contribution provisions. Employers contribution can be purely discretionary and not mandatory. However, contributions must be recurring and substantial. Each participant has an individual account and each account balance consist of employer contributions, investment returns and forfeiture . Forfeitures are usually added to the remaining participants account balances. Appropriate when employers profits vary from year to year Appropriate when an employer wants to adopt a plan that is qualified with an incentive feature to motivate employees to help the company make a profit. Appropriate when employees are young well paid and have substantial time to accumulate. Employer can only deduct a maximum of 25% of participants. Only the first 345,000 of each employees compensation can be taken into account. Deferral into the 401(k) “three seasons, add-on“ IS subject to FICA & FUTA taxes. Catch up CONTRIBUTIONS of $7500 are allowed as well but are NOT used in calculating employer deduction limits or contribution limits. Obviously the opposite is true for the employee perspective. Maybe just remember how it looks for your client, that deferrals are FICA and FUTA free but contributions are tax at FICA and FUTA rates and extrapolate answer. For example, employee makes deferrals to receive the match plus catch-up contributions. The employer only has to match the deferral, not the contribution. Employer may match deferral and deduct up to 25% of employee COMPENSATION. So if the employee deferral is $10,000 for a $5000 match, and his income is $100,000 , the remaining 20% of his hundred thousand dollar income is allowed as a profit sharing contribution from the employer. For $25k total. If he wants to CONTRIBUTE $7,500 he can, if age 50+, this doesn’t affect things. See page R – 11 for more details.

Answer 11

Classified as a DC plan. Carries certain characteristics of DB plan. However it is DC and therefore lower cost and simplicity + targets an adequate benefit but does NOT guarantee a benefit for retiree. Retirement benefit is determined by each participants account balance. Employee assumes investment risk. No annual actuarial determination for contributions. Contribution level will not change, except to reflect new participants in the plan and increases in the compensation of plan participants.

Answer 12

Contributions are catch ups. They are subject to FICA and FUTA. Deferrals are not and are not subject to.

Answer 13

Contributions are catch ups. They are subject to FICA and FUTA. Deferrals are not and are not subject to.

Answer 14

LESSER of $69k or total compensation. Profit sharing plan. W 401k provisions.

Answer 15

Variations of profit sharing plans. Invest primarily in employer stock. Participants Accounts are stated in shares of employer stock. Benefits normally distributable in employer stock

Answer 16

Defined benefit, money, purchase, and profit sharing. Keogh plans cover business organizations that are not incorporated. Sole proprietorships and partnerships.

Answer 17

15% multiply business profit by 12.12% 25% plan multiply business profit by 18.59%. Example net profit of $50,000 by 12.12% for the self employed owner, and 15% for employees. If you’re not employed, but rather work for the company, you own, you can get the full 25% match. Like Ian Waldo working for Waldo wealth. Or Katie Waldo working for Waldo wealth

Answer 18

Cousin of 401(k), for nonprofits, “cyclists” of the world. Get $23,000 deferral. + 7,000 deductible contribution. like a cyclist that can drive in road and not stop at red light. Vs a 401k, may eliminate deductible Ira ability for participant.

Answer 19

If a plan covers 100% of highly compensated in place, up to 30% can be excluded since 70% at least must be included, covered, benefited.

Answer 20

Highly compensated employee. Greater than 5% owner or any employee earning in excess of 155,000.

Answer 21

Like HCE, greater than 5% owner, OR compensation $155,000 or more AND greater than 1% owner. OR officer AND compensation over 220,000.

Answer 22

Ex: NHCE IS 3%, add 2% for HCE = 5% 2% - 8% NHCE? Add +2% to get answers for HCE MAX eligible deferral %. FYI, if defer isn’t used, but CONTRIBUTE is, for age 50+ employee you can add $7,500 to answer

Answer 23

DB CB MONEY PURCHASE TARGET BENEFIT PROFIT SHARING STOCK BONUS (& SEP)

Answer 24

ESOP SIMPLE 401k Simple

Answer 25

444 S 401k 403b 457 Simple (and Sar Sep)

Answer 26

HMO is the hamburger. PPO is the prime steak. HMO (Health Maintenance Organization): Usually has lower premiums and out-of-pocket costs but requires you to stay within a specific network and get referrals to see specialists. It’s more restrictive but can work well if you’re okay with limited choices and structured care. PPO (Preferred Provider Organization): Offers more flexibility—you can see any doctor without referrals and have access to out-of-network care (though at a higher cost). However, PPOs generally have higher premiums and deductibles.

Answer 27

The required beginning date is April 1 of the year following the year and which are covered individual attained age 73 OR retirement, whichever is later. Subsequent distributions must be made by December 31 of each year there after. Exception is 5% owners. They cannot delay.

Answer 28

25% of rmd from investment plan if not taken. His required beginning date is April 1 of the year following the year in which he attains age 73. He’ll also need to take an RMD at the end of that year for age 74 as well. So delaying may not make sense as it may bump employee up into a higher tax bracket and expose them to higher Medicare premiums. Stupid, But even though you have to take money out due to secure act 2.0, you can also contribute to the plan after attaining the age of 73.

Answer 29

From plan… 20% withholding but not 10% penalty for a direct pmt (to ex spouse). This is an exception.

Answer 30

If both spouses or a single person are/is not an active participant, then the IRA contributions are deductible. If one spouse is an active participant, the other spouse who is not an active participant can deduct an IRA contribution if they combined AGI is less than 230 to 240,000. For deductibility of active participants, phase out is 77 to 87K for a single person, 123K to 143K for MFJ.

Answer 31

QUALIFIED education cost for participants child is one of correct answers. Must be QUALIFIED cost, not just any cost.

Answer 32

Mean the same thing. Example: rabbi trust.

Answer 33

NSO (Non-Qualified Stock Options) – This is like a regular coupon anyone (even non-employees) can get, but it doesn’t have the same tax perks as an ISO. Can be given to anyone (employees, contractors, board members). You pay income tax on the profit immediately when you exercise the option. When you later sell the stock, any additional gain is taxed as capital gains (long-term or short-term, depending on how long you hold it). When an NSO is Good ✔️ You plan to sell the stock quickly and don’t want to deal with AMT. ✔️ You are not an employee but still get stock options. When an NSO is Not Good ❌ You want lower taxes, but NSOs get taxed as regular income when exercised. Example of NSO Your company gives you an NSO to buy stock at $10 per share. A few years later, the stock is worth $50. When you buy the stock, the $40 profit is taxed as income. If you sell later at $60, the extra $10 profit is taxed as capital gains.

Answer 34

ISO (Incentive Stock Options) – Think of this like a golden ticket with special tax benefits, but only for special employees. You don’t pay taxes when you get the option. When you exercise (buy the stock at the set price), you don’t owe regular income tax, but you might owe AMT (Alternative Minimum Tax) if the stock has gone up in value. When you sell the stock, if you wait at least 1 year after buying AND 2 years after getting the option, you only pay long-term capital gains tax (which is lower than regular income tax). If you sell too soon, you lose the tax perks, and it’s taxed like an NSO. When an ISO is Good ✔️ You believe the company’s stock price will go way up, and you plan to hold onto it long-term for lower taxes. When an ISO is Not Good ❌ You need cash soon or can’t afford the tax hit from AMT. Example of ISO Your company gives you an ISO to buy stock at $10 per share. A few years later, the stock is worth $50. If you hold it for at least 1 year after buying, you only pay capital gains tax on the $40 profit. If you sell it too soon, the $40 is taxed as regular income (ouch!).

Answer 35

Does NOT coordinate with elective deferrals. For example, not coordinated with 401(k), 401(k) or sarSEP deferrals. Conceivably, if you qualify, you could put away 23K plus catch up if you’re old enough into a 457, and repeat the same thing into a 401(k) as well. Same tax year. Damn.

Answer 36

True. Cannot get both. But CAN get Medicare at age 65.

Answer 37

Trick question. There is no dollar amount contribution. It’s actuarially determined. There is a maximum benefit to solve for: $275k per annum

Answer 38

The employees

Answer 39

ERISA plans such as 401k ARE exempt from creditors. IRA plans MIGHT not be exempt.

Answer 40

Deferred compensation. *For a sole proprietor will not work as a solution.*

Answer 41

DB. Participants insured death benefit must be no more than 100 times the expected monthly benefit. For example, the monthly benefit is 4000 then the life insurance death benefit cannot exceed 400,000.

Answer 42

DC plans. The aggregate premium is paid for participants. I’m sure death benefit are at all times less than the following percentages of the plan cost contributions for that participant : Ordinary/whole life is 50%. Universal life and term life are both 25%.

Answer 43

Insured retirement plans. Fully funded.funding is restricted to life insurance (100x rule) and/or annuities

Answer 44

Only a Roth and a Roth inherited by a spouse are not subject to RMD rules. In other words, if a child, etc, inherit, here she has to withdraw over 10 years. You know this, you just screwed up on the practice. You’re going to get it right on the real exam bud. Pray for this question.

Answer 45

Two owners. Not the business.

Answer 46

After tax rate of return - inflation rate = required death benefit. Plus, add one more year of expenses since the death benefit will need to grow to produce the income that will then be drawn down over the course of the year. Example $36k needed annually. Growth @ 7% -inflation at 4%. = 3%. Don’t use time value because it’s an instant calculation, there is no third variable - time. It’s immediate and the math therefore reflects this. $36k/.03 = $1.2mm + 36k needed rn = 1.236mm is answer.

Answer 47

She an A++ student. Best there is. A++ AMBEST rating for insurance S&p is other rating firm Sticks & pucks AAA

Answer 48

This is the order from least to best coverage. Basic wharves/flt Broad = basic + RAFF OPEN lists perils NOT covered, everything else is covered. Open peril coverage provides the best protection.

Answer 49

Better… open form on dwelling. B other structure is open 10% of A (Abode) coverage, 50% BROAD (better than basic) on C (contents)(personal property), D…Demnity is OPEN but @ 30%

Answer 50

A. All my fault. B. Bed at hospital. C. careless crook D. Damage to your auto. A liability B medical pmts C uninsured motorist D damage to your auto

Answer 51

Other than collision.

Answer 52

Tax free benefit (its hug and hug)

Answer 53

Included in recipients gross income and generally taxable

Answer 54

"Twenty days of paradise, then the “it’ll cost you $204/night tease” begins—make it to 100, and she’s done playing. You get nothing."

Answer 55

If company has Fewer than 20 employees for at least half of the year are exempt. However, if an employer has 19 full-time + 4 half/parttime, the part-time (covered) employees count as a fraction of full-time employee. If that number = 20 or greater, cobra must be provided. Keep in mind the first requirement is that the employee is participating in the health insurance plan. If he is not participating then he cannot elect cobra. -18 mo Job related (termination, full time to part time) -36 months Non job-related… ex Dan Walker death so she gets 36 months, divorce,legal separation, eligibility for Medicare, reaching age 26, marriage, etc Dental and vision covered, group disability is NOT Voluntary termination IS a qualifying event aka cobra eligible

Answer 56

One. Above the line adjustment. Even if you don’t itemize. Two. Tax deferred. Three. tax-free withdrawals

Answer 57

Guaranteed renewable policy is less expensive than a non-can because the insurer may increase the premium for the guaranteed renewable policy later. This is similar to what happened to Mary. Carol’s tradition LTC policy. Non-cancelable means that premium stays at the stated premium permanently.

Answer 58

Age 51 through 60 almost $2000 $1760 a year Age 61 through 70 almost $5000, $4710 a year

Answer 59

Life to life is acceptable. Annuity to annuity is acceptable. Annuity to life is acceptable. Life annuity is NOT ACCEPTABLE. Make sense all those ass clowns that sell annuities. Get to keep their money locked up and screw the client. Limited flexibility. O I B Owner and insured must both be same before and both after in order to maneuver this.

Answer 60

Pretty much always the right answer

Answer 61

Pretty much always the wrong answer

Answer 62

Can’t even pay C-CASH E-EXTENDED TERM P-PAID UP INSURANCE Also, just note the disability waiver premium means if you’re fully disabled the insurance company kicks in and pays your premium. Just like it says. Not hard. If there is a disability waiver of mortality and administration expenses, same thing; insurance will begin to pay for the mortality and administration charges for a disabled client. But not the full premium because that’s not what the insured bought.

Answer 63

CRAPO Cash Reduce premium Accumulate with interest Paid up additions One year term/5th dividend

Answer 64

Look for LTCG for L(ife) settlement

Answer 65

Value Rule is a tax rule that applies to life insurance policies.

Answer 66

Entered into on or after (June 21)1988. Fails to meet the seven year pay test Distributions are tax lifo Once a MEC, always a MEC.

Answer 67

Simpler than a cross purchase, but not as tax efficient. Use when you have more than three or four owners, such as a partnership with 30 partners.

Answer 68

Just like an IRA, subject to a 10% penalty . Only on amount exceeding basis. Basis comes out income and penalty tax free.

Answer 69

Full amount, including the $50,000 exemption is taxable.

Answer 70

Full amount, EXCLUDING the $50,000 exemption is taxable.

Answer 71

Because even if you get one dollar more worth of coverage, it may become a MEC. *If you DONT have to prove insurability: As long as you are only adding $150,000 death benefit or less don’t worry about it. If adding over 150,000 it might also become a MEC.

Answer 72

O.I. on gain to viatical settlement company. Tax for the beneficial. As long as they expected die within two years.

Answer 73

LTCG = L ife settlement treated as LTCG gains, for anything above higher of cash/surrender value or basis (basis to cash surrender value taxed at O.I.).

Answer 74

Tax-free if supposed to die within 24 months. Otherwise subtract premium paid from sale price to get the taxable gain. Ex: 280k sale price <80k> premiums paid cumulatively = $200k gain. This is only taxable if the insured is expected to live greater than 24 months. This is different than the viatical companies taxation, which = ordinary income based off of the death benefit minus Total paid, including continuing the policy with premiums until insured die.

Answer 75

Current value divided by (1-annual dep % * number years depreciated) = answer Ex 255k current, depreciated 4.5% past 6 years? 255k/ (1-.27) .27 is found by = 4.5%*6yr

Answer 76

AN NPS AL VL SL Attractive Nuisance – "If your property is too sexy, expect uninvited guests." That unfenced pool? That abandoned fridge? It’s basically lingerie for neighborhood kids. If they can’t resist and get hurt, you’re on the hook. Negligence Per Se – "Break the rules, get spanked (in court)." You ran a red light, served booze to a minor, or ignored a safety law? The law doesn’t care if you meant to—it’s automatic liability. No safeword here. Absolute Liability – "You played, now you pay." You brought dynamite to the party? You own a pet tiger? Doesn’t matter if you were careful—if something goes boom or rawr, you're 100% responsible. No getting off easy. Workers comp. Vicarious Liability – "Your employee screws up, and so do you—just not in the fun way." If your worker causes damage while on the job, guess what? You’re the one taking responsibility. It’s like a bad threesome where only one person gets screwed. Strict/Product Liability – "If your toy breaks, so does your bank account." Sold a faulty product? Doesn’t matter if you tried to make it safe. If it malfunctions and causes harm, you’re getting undressed financially—whether you like it or not.

Answer 77

LTCG property. This would include stock in a c-corporation. whether it’s a small law practice or Apple corporation. Shares are shares. IRAs, 401k, CDs, etc. don’t. They are taxed ordinary income property.

Answer 78

The right to assign, terminate, borrow against cash reserves, name, beneficiaries, change beneficiary. Premium paying is not an incident of ownership.

Answer 79

Collar: covered call + Buy put CCC. Collar Covered Call +buy put Think Mark Cuban with the Yahoo stock. He wanted to buy puts to protect his investment. In order to fund his puts, Cuban sold covered calls. C CCC. Cuban Collar Covered calls

Answer 80

Crummey 529 Utma/ugma 2503(c)

Answer 81

Cannot gift future interest items and expect a $18,000 exemption. Unless it’s an exception item. Gifts of current interest are the ones that can get the $18,000 exclusion. Gifts of future interest cannot.

Answer 82

Wasting assets. Might not be valued as of the AVD.

Answer 83

JTWROS Property the bene hasn’t already bene from… unlike a pension

Answer 84

Preserve trust principle for the original grantors children. But provide income for spouse thru deceased spouse assets. Thinks Ricky Martin. Second marriage.

Answer 85

Crummy trust is present interest Irrevocable trust is future interest

Answer 86

CRat Charity gets the remainder, non-charitable beneficiary gets at least 5% per year.

Answer 87

Don’t use an installment sale. Consider SCIN instead.

Answer 88

Lesser of base% or 5.7% on dc plans. Add that % to 5.7 to get the excess percentage On DB plans use 26.25 % not 5.7%, {all else equal rules (?)}

Answer 89

Take the lower of FMV or basis and don’t forget to subtract 18 K. Do not forget.!!! Ex Billy gifts Brice $618k. TAXABLE gift is $600k. But if doesn’t give over $13.61mm, will use Costco conveyor coupon card and not pay any gift tax.

Answer 90

windstorm, hail, aircraft, riot, vandalism, vehicles, explosion, smoke, fire, lighting, theft ChatGPT said: A windstorm tore through the city, followed by hail that pelted the ground. An aircraft flew overhead, viewing a riot below, fueled by vandalism. Vehicles were abandoned in the streets as an explosion shook the area, sending smoke into the sky. Fire erupted, lightning lit up the night, making east picking for thieves.

Answer 91

One stormy night, a city’s 1. power system ruptured, causing an 2. artificially generated electricity surge. 3. Objects fell from shelves, crashing to the ground. Meanwhile, the freezing temperatures caused the 2. plumbing to freeze, flooding the streets with icy water.

Answer 92

A new ordinance/law was passed to ensure safety, but soon after, a power failure struck the city. An earthquake followed, shaking everything to its core. A nuclear hazard was damaged reactors. In the chaos, neglected roads and infrastructure led to war. People suffered from the intentional loss, and finally, a flood swept through the city, drowning all.

Answer 93

Fiscal policy is controlled by the government, while monetary policy is controlled by a central bank. Fiscal = feds Monetary = money and banking

Answer 94

By April 1 yr following eligibility

Answer 95

Indeed it is subject to 10% penalty

Answer 96

Pay (up to) 25% of depreciation recapture. So $1500 of depreciation taken on a home that gets sold is now taxes @25% of $1500

Answer 97

Yes, when the parents hit 59 1/2. It’s both tax efficient and not included in the financial aid calculation. Unlike a 529, utma , or coverdell.

Answer 98

Excess alimony payment is amount that exceeds paymentrwhat is allowed. Add what was paid in the first two years and subtract $37,500. Basically, your age right now. To remember during the exam. Amount paid -$37.5k leaves recapture as remaining amount.

Answer 99

One of those 6 plans Trad pension Cb Money purchase Target benefit Profit sharing with 401k ESOP

Answer 100

Bargain element on an ISO. Bargain element is the excess of the fair market value at the exercise date over the option price Property, state, city and sales taxes. Limited to 10 K per year.

Answer 101

May include PRIVATE censure Suspension Revocation PUBLIC letter of admonition

Answer 102

5yr rule must be met, then up to $10k above contributions can come out tax-free and without 10% early w/d penalty.

Answer 103

For AGI purposes, qualified dividends are treated the same as ordinary dividends. But their text differently. Same applies to LTCG.

Answer 104

Turn it to net and then run the calculation. Don’t do calculation off of gross.

Answer 105

FMV of the stock as of the date when it was transferred to the charity. You could elect basis, but often times the gift at FMV produces a larger, charitable income tax deduction. (if the stock has appreciated).

Answer 106

Deduction * tax rate ie 37% = equivalent Credit Ex: $10,000* 37% = $3,700 Vs Credit/tax rate ie 37%. = equivalent deduction $10,000/.37 = $27k

Answer 107

Yes. Give taxes paid that is attributed to the appreciation of the gift.

Answer 108

Yes! All there is no 1000 hour Arista rule for 403B

Answer 109

Permanently repealed in the 2017 tax cuts and jobs act (TCIA)

Answer 110

Pray for this answer choice… NO! LONGER! EXISTS! The answer is no!

Answer 111

Are nonexistent. Only a casualty loss from a federally declared disaster is deductible. Thank George Bush blessing Hurricane Katrina as a disaster zone from his helicopter. No helicopter, no deduction.

Answer 112

The answer is no. Unless it’s a federally declared disaster. By the federal government. AKA George Bush.

Answer 113

Are below the line. Down Dumb fuck. Adjustments are above the line asshole.

Answer 114

No. QBI is the net income (profit) from a pass through business. QBI is Calculated off taxable income.

Answer 115

Two hours every two years. 30 hours of total CE every 2 yrs, but only two of the 30 must be an ethics.

Answer 116

Voluntary employees beebfyciafy association 501c9 Funds death benefits, medical benefits, unemployment benefits for employees. Self funded by employer. Retirement and deferred compensation must not be funded.

Answer 117

Sue the plan officials for losses as well as other factors. Errant officials can be personally held liable, but ERISA prohibits monetary punitive damages for claims.

Answer 118

No. Only if turns to NSO THRU disqualification because of exercise and sold in same calendar year, employee may need to recognize profits as comp.

Answer 119

May be available for the undergraduate years, but not for the graduate years.

Answer 120

FULL value of home reflecting date of death FMV is brought back into the gross estate

Answer 121

Non MEC 1987 of before Withdraws up to basis are tax free Any withdrawal beyond basis taxed as ordinary income but only after the entire basis is withdrawn Policy loans are tax free 6/21/1988 or later (MEC) Withdraws are taxed LIFO, earnings out first, ordinary income. Policyholder is under 591/2 will subject withdraws to 10% penalty on taxable gains Policy loans also treated as taxable withdraws. O.I.

Answer 122

Are typically FUTURE interest gifts

Answer 123

Greater of cash value or premiums paid.

Answer 124

First make sure it’s not diversified fund. Or diversified manager. Because if it is, you can still use treynor ratio. Otherwise can go to sharpe ratio.

Answer 125

= investment $ into the contract/expected total $ payouts $100k into annuity Expect 20yrs of $833/mo $100k/833 *12*20 yr = 200k $100k/200k is 50%… So 50% of each payment is tax free return of basis and 50% is taxable ordinary income

Answer 126

True. As in other IRA type arrangements, for simple plans, the RBD is always the April 1 of the year, following the calendar year in which the covered participant attains age 73. Whether or not he continues to work for the employer, providing the simple plan.

Answer 127

Borrowed or withdrawn or reduce upcoming premiums. Not not when earned. Gain subject to OI tax plus 10% penalty under 59 1/2

Answer 128

Indeed are retirement plans but not “qualified plans” Qualified are Defined benefit, cash, balance, money, purchase, target benefit, profit, sharing, 401(k), stock, bonus, and ESOP.

Answer 129

When the market has a whole move higher, this mutual fund moves down at the same rate.

Answer 130

Create no exposure to transfer for value income taxation of the death proceeds.

Answer 131

Negative NPV can still mean you made money. But not enough to justify the investment compared to other options. An investment can be profitable even if its NPV is negative. MEETING required rate of return means NPV was 0

Answer 132

Passive loss. Not deductible until limited partner sell’s interest or dies.

Answer 133

If the policy is sold to ANYONE other than the insured himself, or to a business in which the buyer is an owner or partner in a PARTNERSHIP, not Corp, it creates transfer for value issue. Even another business partner or spouse. Making DB net of basis subject to federal income tax. FYI 3 year rule don’t apply when a sale (transfer for value) occurs.

Answer 134

IDENTIFY: is it a corporation, including INC? Or a partnership?

Answer 135

Investment income, since it represents a distribution of profits

Answer 136

Yes. 457 is not considered an active participant for purposes of deducting IRA contributions, so Ira contribution IS deductible.

Answer 137

More generous, personal property limits than policies without this endorsement. Think rings, fur coats, guns, etc.

Answer 138

Term life according to CFP

Answer 139

True. Which means the GRANTOR must pay tax on the income of said trust.

Answer 140

Not expected to lose principal and accessible within 1 year… like a CD… not a s&p 500 etf

Answer 141

Not a “marital” A trust.

Answer 142

Yes!(limited to age based limitations)…. Adjusted annually

Answer 143

Self insurance

Answer 144

Most flexible and effective plan to share in employees future and firm profits

Answer 145

Eligible for and enrolled in Medicare. *ENROLLMENT IN either Medicare part a or part B will disqualify an individual from contributing to an HSA. Merely being eligible does not preclude HSA contributions. Also, you are not automatically covered for Medicare at 65. You must enroll by contacting Medicare.

Answer 146

Limited to BASIS

Answer 147

$50k OI plus $3k capital loss IF SINGLE, remainder is tax loss carry forward $100k o.i. Loss if MFJ + 3k capital loss, remainder is tax loss carry forward

Answer 148

Qualified plan distributions, not to IRA distributions. Think about Sadie and John when they got divorced. John had to give some of his 401(k) to Sadie, which came over in an IRA for her and the kids.

Answer 149

Ex $150k premiums - $10k cost of insurance = $140k basis If life sett meant offer comes in at $400k -$140k = $260 gain. TAXATION OF PROFIT: If cash value EXCEEDS premiums paid, let’s say $175k is cv, then $175k-premiums paid of $150k, $25k taxed at ordinary income, and balanced treated as cap gains $260k-$25k = $235k cap gain. Just back into the answer when answering this type of question

Answer 150

Yup u betcha

Answer 151

Must have a required rate of return in order to calculate

Answer 152

NOT subject to Medicare taxes, fica, or FUTA

Answer 153

The present value of the remaining periodic payments would be included in child’s gross estate for federal estate tax purposes. Nothing indicates the settlement ceases at death.

Answer 154

Legal: attorney Medical? Doctor Tax? CPA child is not right answer they aren’t in the same account. Nor is compliance if not clearly indicated that assets are with your bd/ria

Answer 155

Flu & pneumonia

Answer 156

SEMI-annual!!!

Answer 157

Current value say of fridge $1500. Supposed to last 15 years, dies after 10. Even if you paid $7000 or $700 or some other number for it, don’t matter. $1,500 new * 5/15 = $500 would be what insurance pays towards new one.

Answer 158

Schholarship taxation. Room and board, plus all expenses are still taxed even if wendy agrees to work for federal government in future. A scholarship or fellowship given to a degree candidate who agrees to work for the federal government is taxable.

Answer 159

Executor can elect to value a farm for federal estate tax purposes based on actual current use. As opposed to the fair market value of the property if it were sold for development purposes.

Answer 160

Can be any percentage Annually. Including skipping the distribution entirely. Just like I can skip making contributions to AWPC/opc/etc Can you turn the faucet on and off whenever you want. Just like you can write checks whenever you want from a bank account to your favorite charity. Or not. NOT the case on a CRT(CRAT/CRUT)

Answer 161

Gifts to political parties are exempt from federal gift tax

Answer 162

NOT taxable nor 10% penalized

Answer 163

Can expense/deduct. Instead of having to depreciate/amortize/capitalize

Answer 164

If employee fucks it up and is sold before EGGS is complete. The exercise of fair market value at the time of exercise over the exercise price is treated as comp to the option holder and creates a corresponding deduction for issuing Corp.

Answer 165

No! It’s her alimony pmt/income, not mine. She may be able to if her income qualifies.

Answer 166

Ranking questions, identifying the most, and least important generally lead due to the answer. The middle choices are often too similar to differentiate.

Answer 167

Regarded as a fixed income investment with little growth potential.

Answer 168

The spread between interest rates and inflation is known as real return.

Answer 169

Not deductible

Answer 170

Yes. Sure does. So $28k amt paid us added to $100k basis to make it $128k adjusted basis

Answer 171

Then you get to make deductible IRA contributions and AGI does not phase out for deductibility. Even if if you earn millions annually.

Answer 172

Yes, they are eligible to do this. Provided they take a lump sum distribution of the deceased employees account balance.

Answer 173

10% if under 59 1/2 of basis and any unrealized gains at time of DISTRIBUTION. After that, any future gains avoid 10% penalty as it’s an a brokerage account. and it is either going to be taxed at ST or LTCG.

Answer 174

Only 2 years, then she only gets $250k like any other single folk

Answer 175

Can qualify Any age if been on Ss disability at least 24 months. Or end stage renal, ALS, Lou gherigs… any age and no 24mo wait.

Answer 176

Same as we tell clients 3 months prior (to age 65 bday)

Answer 177

Only for Self-employed. Or if aggregate premiums other than reimburse medical expenses exceed 7.5% of AGI.

Answer 178

A flat deductible, only, for 60 days. Not needed to be known for exam.

Answer 179

Yes once you are enrolled, companies cannot rate you. I.e. exclude for or existing.

Answer 180

True. The donut hole limits what drug plan covers for prescriptions of to a specific dollar amount at which coverage reactivates. Part coverages for outpatient drugs rather than those administrated in a hospital. Those are generally covered under Medicare part a.

Answer 181

Keogh plans. (18.59%). You can contribute 18.59% of net schedule C income and a simple IRA.

Answer 182

Three years for a sep