CFP Thing To Memorize Flashcards
Charitable Lead Trusts
Grantor receives a charitable income tax deduction for the PV of the charity’s income interest.
Charitable Remainder Trusts
The grantor receives a charitable income tax deduction for the PV of the charity’s remainder interest.
Charitable Gift Annuities
A donor transfers cash or property to a charity and the charity pays the donor or other donees an annuity payment each year for life.
Gift tax charitable deduction is the PV of the charity’s remainder interest.
Gift annuity payments to a spouse: a marital deduction is available if the spouse receives all annuity payments and has general POA over payments after the donor’s death.
Gift annuity payments to others: gift tax is the PV of the annuity payments.
Pooled Income Funds:
A donor gifts property to a charity and receives an annual pro-rata share of income from the charity’s commingled funds, for life.
Additional gifts can be made to the fund to increase the donor’s income stream.
The charity manages the fund which cannot invest in tax-exempt securities and receives the remainder when the donor’s income interest ends.
Donor takes an income tax deduction for the PV of the charity’s remainder interest.
The donor pays income taxes on the income received from the fund.
Private Foundation
A separate legal entity, either a not-for-profit corporation or a tax-exempt trust.
Most are funded and controlled by family members. High set-up and maintenance fees.
Family members who make gifts to the foundation may take an income tax deduction limited to 30% for cash and to 20% for LTCG property.
The foundation must distribute a minimum of 5% of the assets to public charities every year.
Donor-Advised Funds
Maintained by charities, community foundations, or mutual fund companies.
Donors may contribute cash, stock, or other property to their individual fund accounts and select the charities they want to receive their grants.
Donors are entitled to a charitable income tax deduction based on the type of property contributed, subject to AGI limitations.
Housing Cost Ratio
PITI/Gross Income. <28%
Consumer Debt Ratio
Non-housing consumer debt/ Net Income
<20%
Total Debt Ratio
Consumer Debt + PITI/ Gross Income
<36%
Exclusion Ratio
Investment in contract/ Annual Payment•Life Expectancy
Margin Call Price
((1-initial Margin)/ (1-maintenance margin)) • Initial Purchase Price
Exclusions from Income
Municipal Bong Interest
Accident health Plans: Employer Premiums
Fringe Benefit
Inheritance gifts
Accident and health Plans: amounts receive
Scholarships
Personal residence sale gains 250k
Adoption assistance program
Death benefits
Dependent care assistance programs
Educational assistance program: 5k
Debt discharge
Meals and lodging for employees
Interest on Education (EE) savings bonds
Compensatory Damages compensation
Support payments received (post 2019)
Adjustments to Income: Above the line
Tradition IRA contributions
HSA contributions
educator expenses
moving military
student loan interest
business expenses
early withdrawal penalties (CDs)
alimony pre-2018
Retirement self employed
Self employed health premiums
Half SE taxes
AMT Formula
Regular Taxable income
AMTI (alternative minimum taxable income)
AMT base
Gross AMT tax
Tentative minimum tax (TMT)
AMT*
Maximum Annual Charitable Deduction
Property (not-personal) to Public charity
Cash gifts 60%
LTCG w/FMV Election 30%
LTCG w/Basis Election 50%
Ordinary income 50%
Half it and round up to nearest 10% for private
