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Danko Final Quizzes Flashcards

1
Q

Quiz 1 (6)
What is the definition of NPV?

A

Its calculation discounts unequal cash flows at a required rate of return less the initial cost of an investment.

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2
Q

Quiz 1-9 What are the AMT add back items? What are the preference items?

A

Add back: ISO Bargain Element, property, state, and city taxes

Preference Items: IPOD, Excess intangible drilling costs, private equity muni bonds, Oil and Gas percentage depletion (not cost depletion), Depreciation (ACRS/MACRS)

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3
Q

Quiz 1-10 Kevin a wealthy retired. Individual is interested in establishing a gifting program for his three children a grandchildren. Another financial planner is suggesting a plan that would create limited tax consequences to the Dan plus provide the Doni with potential future growth. Currently, Kevin owns the found assets and is considering whether to gift them.
1. High yield corporate bonds
2. Corporate zero coupon bonds.
3. T Bill’s the mature in 90 days. Wait til they mature then gift.
4. ABC Inc. stock with a basis of $400,000 paying 20 grand of dividend annually.

A

Wait until the T bills mature then gift. This will limit the tax consequence for the done and provide future growth.

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4
Q

Quiz 1 21
Tommy John, who currently lives in Ohio inherited a attractive land from his parents prior to dying in his parents had sold all the trees that had been on the land to the big ax lumber company big X cut all the trees for the stumps remained. The cause of this land was only valued at $200,000 at the time of time inheritance it would cost Tommy $100,000 to clear the land and make it usable today. Mr. swapper land developer approached him to discuss an exchange. Mr. swapper now owns low line land in Florida that has environmental issues. He cannot develop it for any commercial resident to use while the land is on the coast. The nearest gas station is 30 miles away for some research. Tommy believe that he can build a stilted house on Mr. shoppers Lynn near the beach. Mr. shopper keeps telling Tommy that if the land could be developed it would be worth $1 million presuming that Tommy takes Mr. shopper’s offer, which of the following statements below most accurate flex the tax outcome of the exchange.
A. Because Mr swappers land is in a different state, Tommy will not be allowed to make a 1031 exchange.
B Tommy will have a recognized gain of 700k
C no gain will have to be recognized by Tommy
D Tommy adjusted basis will be 800k

A

No gain will have to be recognized by Tommy.
No boot received= No recognized gain.

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5
Q

Quiz 1-27 If a client has 2k yearly premiums to a UL policy. Makes payments on time and on the 7th year, does a lump sum drop of 38k to the insurance company. Cash value is now 80k. If the client borrows 40k from the policy. What is the tax implications?

A

30k is subject to income tax and 10% penalty. Remember LIFO for MECs
50k is the total contributions. 80k is the cash value, but 50 is the premiums paid. The 30k comes out first and would be taxed plus penalty.

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6
Q

Quiz 1 37 mrs. Pratt, who has always been a conservative investor, expects interest rate to decline. She wants to purchase some high-yield debt to take advantage of current interest rates which of the following bond features would best help Mrs Pratt relax about potential interest rate changes going forward?
A put feature?
Call protection for 10 years?

Explain each

A
  1. She would choose a call protection. If rates are going to go down then companies will usually “call” back their bonds. The protection allows her to enjoy the rates for atleast 10 years.
  2. A Put Feature is used when interest rates are expected to rise. Rising interest drives down prices.
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7
Q

Quiz 1-42 What would be more beneficial to a client that’s in the 12% tax bracket, a 22% tax bracket, or a 37% tax bracket. A credit or deduction?

A

Tax credit for 12% and 22%
Tax deduction for 37%

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8
Q

Quiz 1-43 For funding years in college planning. What are the 4 options, what are the tax implications, and can they be used at the same time?

A

UGMA/UTMA- subject to kiddie tax if child is under 24
EE bonds- parents own the bonds, so you can’t put these in UGMA/UTMA
Coverdell ESA- limited to a total of 2k per year contribution
529- 18k per year or 5yrs 90k
——if die before 5 yrs the unused gift gets brought back to estate.
Can use these all together.

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9
Q

Quiz 1-52 What can a series 6 licensee do? What needs an additional license?

A

Sell mutual funds and UITS but would need a state license for Variable annuities and Variable life insurance.

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10
Q

Quiz 1-53 If someone gifts a stock and has to pay gift tax on the gift, how does that affect the stocks basis for the donee?

A

The donee would add the gift tax paid by the donor to the basis of the stock and get a higher basis.

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11
Q

Quiz 1-55 What are eligibility requirements around qualified and non qualified plans?

A

Qualified DC/DB: Works 1,000 hrs during the initial 12mo period would earn a year of service. Employees working 500hrs for at-least 3 consecutive years will be eligible too.

SEP: 21 yrs old, worked 3 of last 5 yrs, comp greater than $750

Simple 401k same as Qualified.

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12
Q

Quiz 1-55 What is generally the requirement to participate in an employer healthcare plan?

A

Work more than 32 hrs

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13
Q

Quiz 1-58 When is a home equity loan interest deductible?

A

Only if used for home improvements. Otherwise they are no longer deductible since Dec 2017

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14
Q

Quiz 1-59 If a Dr has 700k in profits. Can they claim QBI deduction?

A

No, service related and over the phaseout

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15
Q

Quiz 1-63 How is a section 2503-c minors trust distributed income taxed?

A

Under kiddie tax rules

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16
Q

Quiz 1-65 How can charitably minded clients use bunching charitable deductions and DAF?

A

If you claim the standard deduction you do not get the charitable deduction. So you can bundle multiple years of giving into a single year or you could also put money into a DAF

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17
Q

Quiz 1-69 How much of current income can be offset by NOL carryforward?

A

80%

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18
Q

Quiz 1-73 Is QBI above or below the line deduction? How does it impact the standard deduction?

A

It’s a below the line deduction and can be used with standard deduction.
It’s 20% of QBI generated from pass through business

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19
Q

Quiz 1-78 What is the ethics CE requirement for CFP?

A

2 hours every 2 years?

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20
Q

Quiz 1-83 What is the retirement savings contribution credit and phaseouts?

A

Matches a percentage of taxpayers IRA, retirement plan, or able account. Max credit is 2k single and 4K MGJ. Can’t make over 38,250 single and 76,500mfj

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21
Q

Quiz 1-84 What is the SOFR?

A

It’s the secured overnight financing rate. It’s the base rate used for many loans and financial derivatives.

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22
Q

Quiz 2 What can an employer fund through VEBA?

A

Death benefit, medical benefits, unemployment benefits

Retirement and deferred comp can’t

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23
Q

Quiz 2 -5 What can errant plan officials get sued for?

A

Held liable for losses to the plan including investment losses and others.

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24
Q

Quiz 2-7 in a cross sell purchase, who gets a step up in basis?

A

Both get a step up in basis

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25
Quiz 2-7 When is deferred comp considered compensation?
When it is constructively received. Comp is considered current when it is paid no later than 2.5 months after the year it is earned. For more than a 50% owner the comp must be paid by year end.
26
Quiz 2-12 if a client retires at 65 and has a 401k through an employer. At 73 if he goes back to work by the end of the year, would he still need to take an RMD?
Yes, because he might not be able to participate in the 401k. Might not meet eligibility requirements.
27
Quiz 2-16 What happens if a grantor dies during the retained interest term of a QPRT?
It leaves the grantors estate with no greater tax liability than had the QPRT not been established.
28
Quiz 2-17 When did the MEC start?
1988
29
Quiz 2-31 What is the definition of BETA
The measure of the systematic risk of a security.
30
Quiz 2-35 What happens to alimony payments when the payor spouse dies?
Alimony payments cease.
31
Quiz 2-39 Can stock bonus plans and esops integrate with SS?
Stock bonus plans can, ESOPs can’t.
32
Quiz 2-43 How many are true? 1. Employer contributions to employee group disability insurance plans are generally tax deductible. Benefits will be taxable to the insured employee. 2. when an employee pays for an individual disability policy or the plan is contributory, the employee pays for the plan with after tax dollars till our part contributed on the benefits of your tax-free to the employee. 3. The employer offers an executive bonus section 162 to purchase an individual disability policy for employee. The premium is deductible by the employer, and the benefits are tax-free to the employee. 4. Insured as corporation owners always receive tax, free disability benefits.
All are correct
33
Quiz 2-45 Under endorsement method, if the employee buys the policy from the employer. How much does he pay?
The greater of cash balance or premiums paid.
34
Quiz 2-49 What risk goes away with zero coupon bonds?
Reinvestment risk- no coupon to reinvest.
35
Quiz 2-69 Lana has the choice between 2 diversified mutual funds. The data is as follows 6% risk free Fund x: 17% return, .72 Beta, .9SD Fund Y 20% return, 1.2 Beta, 1.6 SD Which should be purchased?
It says diversified in the questions so you know to look for alpha/treynor
36
Quiz 2-75 Are ISOs included in gross income?
No. Not on grant or exercise only when sold.
37
Quiz 2-76 of the parent who gave gift to a trust, acts as the trustee on the 2503c trust. What is the issue?
Becomes tainted for both income and estate tax purposes.
38
Quiz 2 How is ISO treated for an add back item to AMT?
The excess of the fair market value at the exercise date over the option price is called the bargain element.
39
Quiz 3 What does NPV tells us?
Positive or negative numbers tell us if we have achieved the required rate of return, not profit.
40
Quiz 3 SEC registered advisors with AUM at least 100mill, are required to file annual updates to their ADV within how many days of the end of their fiscal year?
90
41
Quiz 3 how do AMT preference items work?
They might not be added to taxable income but they count towards calculating AMT
42
Quiz 3 Can profit sharing plans be age weighted?
Yes
43
Quiz 3 What language does the MAIC prohibit in regards to ULs and Whole life?
Prohibits indicating that whole life premiums will vanish or the UL will last to age 95
44
Quiz 3 What are the phaseouts and rules for deductible IRAs?
Active in plans - 77k-87k (S), 123k-143k (MFJ), both can deduct IRAs 1 active, 230k-240k, other spouse can deduct IRA
45
Quiz 3 How does company provided ESOP work for taxes when employee retires?
Stock that was contributed to the employees account will be taxed as ordinary taxes at retirement. The gains at retirement will be taxed as LTCG when the stock is sold. The gains/losses from retirement to the date of sale will have capital gains/losses like normal.
46
Quiz 3 Which plans are subject to FICA/FUTA? profit sharing 401k, simple IRA, SARSEP, 403b, section 125 plan
All except Section 125 are subject. Section 125 contributions are elected before the employee companies actually earned.all the other plans are shown on employee deferrals.
47
Quiz 3 If a newly wed gifts 1 mill to her husband with the written instructions to gift it to her daughter from a previous marriage, what would happen if the 1st spouse has already exhausted her gift exemption?
IRS would probably look at this as a step transaction and this fraudulent. The donee spouse never had the property outright or general appointment to the million. So this would be a taxable gift to the donor spouse
48
Quiz 3 client started substantial equal payments annual from IRA at 58. She received 3 payments then stopped taking payments. What happens to the distributions?
All distributions before 59.5 will be recaptured and charged a 10% penalty plus interest.
49
Quiz 3 What is the wash sale?
Sale of a stock for a loss 30 days before or after purchasing the stock. Bought ABC March 1st $15, Bought Dec 1st $10, Sold Dec 31st $10….disregard the Dec 1st and use the March = $5 loss Nov 30 purchase LMN $50, Dec 15 purchase LMN $52, December 29 sold $54….sold for gain…no wash
50
Quiz 3 When do gift taxes paid on a property affect the basis of the property?
When the property has appreciated, you can add the gift taxes paid to the basis for a new basis for the donee. If the property has lost value, the donee just receives the property at the normal basis.
51
Quiz 3 Which of the following are included in a corporate annual report? Depreciation methods, stock options, profitability projections, inventory methods, outlook for the firms products in various industries in which it operates.
All but the profitability projections. sEC thinks these types of projections are misleading to investors.
52
Quiz 3 What does a HO-15 endorsement policy provide?
Increased limits on property and higher sub limits on jewelry and furs.
53
Quiz 3 if you provide care for a disabled child who was disabled prior to a certain age, are you eligible for SS?
Yes
54
Quiz 4 If any portion of the trust income is used to purchase life insurance on the grantor or the grantors spouse, how is the trust income taxed?
Becomes a grantor trust and the grantor pays tax.
55
Quiz 4 When dealing with a clients estimated unequal cash flows from a potential investment, what is the major difficulty that you, as a financial planner, may encounter? 1. Whether to use time value of money 2. What discount rate to use 3. Whether the investment under consideration should be rejected if the NPV is a negative number 4. How the IRR will be reinvested
2. The difficulty is in determining what discount rate (clients required rate of return) to use for the investment
56
Quiz 4 Which describes a Health FSA? HRA? HSA? 1. It is an employer funded plan that makes available to employees a fixed pool of money to reimburse for qualified medical expenses (not taxable to employees) 2. It is an option under a cafeteria plan through which employees may defer salary on a pretax basis into an account created exclusively for reimbursing or paying the qualified medical expenses of the employee 3. It is a trust created exclusively for the purpose of paying for the qualified medical expenses of the account holder. The account holder may be any individual covered by a qualifying high deductible.
1. Is HRA 2. HFSA 3 HSA
57
Quiz What is a SERP. Multiple answer 1. It is a supplemental executive retirement plan 2. It is an informally funded plan to provide benefits that greatly exceed those provided by a normal retirement plan 3. It is also called a top hat plan 4. It must cover all employees for the supplemental benefits
First 3.
58
Quiz 4 Mr able created a 1 mill GRAT. He reserved a 5% annuity for a period of 20yrs. If the grantor retained interest is $563,165. What is the amount of the taxable gift?
436,835 1mill-563,165 (retained interest). Gift of future interest so not a gift of present interest.
59
Quiz 4 if an annuity says the payout is calculated based off a 20 year life expectancy, what happens to the payments after?
Become 100% taxable
60
Quiz4 How much is a 144 loss for single person? MFJ? How much would a 120k loss for a single person be?
50k, 100k 50 ordinary loss, 3k capital loss, 67,000 carry forward
61
Quiz 4 If it’s a life settlement questions and the person is not terminally ill, what should you look for? If client paid 150k in premiums over the year, cash value is 175k, and the cost of insurance was 10k. Sold policy for 400k what’s the tax ramifications?
LTCG. 150-10=140 Basis 400-140=260 recognized gain 175 cash - 150 premiums = 25 Ordinary income tax 260-25=235 LTCG
62
Quiz 4 How does bond immunization offset interest rate risk with reinvestment rate risk.
Because if interest rates drop client can earn more on coupon payments that are reinvested and vice versa
63
Quiz 4 how is a ring insured on an HO3 policy?
Limited to a dollar amount 1k-1500, but loss has to be because of theft. Concept is around theft. Must be reported to the police.
64
Quiz 4 Kid 14 has UTMA income Of muni $500, LTCG 600, Qualified Dividends 1,200. What’s her tax? Parents 24%
0 First 1300 are free Second 1300 are at her tax rate of 10% which has a 0%cap gains tax The rest would be at parents rates
65
Quiz 4 Which statement regarding a Health FSA are correct? 1. It may receive contributions from an eligible person 2. Allowable contributions are not subject to FICA 3. Allowed contributions are not included in income 4. Reimbursements from the health FSA used for expenses are not taxed
1,2,3 … 4 doesn’t say Qualified
66
Quiz 4 Which of the following is/are considered conduit income? 1. K1 income from an S Corp 2. K1 income from a partnership 3. Dividend income from a Corp 4. DNI from a trust 5. K1 loss from active participation in real estate
1,2,4 5 would be correct if it said “income” 3 dividends are after tax distributions.
67
Quiz 4 What is the benefit of taking limited income from an S Corp?
Reduces FICA/FUTA taxes and the remainder of income is unearned income
68
Quiz 4 in an HO6 policy, if a condo association makes an assessment because of a loss to collectively owned property. Is it covered under the HO6 policy?
Yes, limited coverage on coverage A and B for named perils. 5k to start but they can buy more
69
Quiz 4 What are the dollar amounts for Health FSA and DCFSA?
3200 HFSA contribution limit, 649 indefinite carry forward if allowed or 2.5 month grace period. 5k DcFSA limit.
70
When are disqualified ISOS SUBJECT TO FICA/Futa tax?
If sale and exercise happened in the same calendar year. If disposition was triggered because violation of two year rule, then it’s just ordinary income tax If both 1 and 2 yr rule are violated, then it’s compensation and subject to FIVA and FUTA
71
Quiz 4 client is no longer mental competent. He’s considering giving POA to someone that has a history of elder abuse. What do I do? Call the compliance officer Call Edwin’s attorney Call Edwin’s children Call his investment advisor
Call his attorney. Attorney has client privilege
72
Quiz 4 What is section 179?
It’s an election to expense tangible property 1245.
73
Quiz 4 Lenny was divorced. He has two daughters with his first wife. A few years before his death, he married Marilyn (second wife). Lenny established a trust for Marilyn. The trust provisions gave Marilyn the right to trust income limited to the ascertainable standards of HEMS. The trust agreement also provides Marilyn with a discretionary right to principal, limited to the same HEMS standards, but which had to be preceded by the exhaustion of Marlyn’s other resources. After Marilyn’s death, the remainder of the trust passes to Lenny’s children. What type of trust is it? How do you know?
Bypass trust The right to income limited to HEMS is lot a right to all income from the trust as would apply to a QTIP trust. Also the QTIP cannot use the lifetime exclusion.
74
How can I differentiate between dollar weight return and time weighted return?
Time weighted (geometric, performance of portfolio manager) factors percentages. dollar weight weighted factors cash flows. Same as IRR/NPV. Focuses on changes in total dollar value treating additions and subtractions of capital as part of the return along with income and cap gains/losses.
75
Quiz 4 Client has spouse die. What can she file for taxes in the year of death? What about after?
Year of death, MFJ, MFS. Year after can be qualifying widow if she maintains a home, has a dependent child, filed a joint return the prior year, or did not remarry. She could file head of household if she has children living in the home.
76
Quiz 5 What does a QDRO cover?
Marital property rights, qualified plans, child supports, alimony. Not IRA
77
Quiz 5 What are some highlights for IRC 2032(a)?
1. Elected by executor 2. Think farmland 3. Real prop needs to be atleast 25% 4. Must have bee held for qualified use and actively managed by decedent or decedents family for 5 out of 8 years prior to the deceaseds death 5. Qualifying prop must pass to the qualifying heir and must continue in qualified use for atleast 10 years after the decedents death. 6max reduction of 1,390,000 (2024)
78
Quiz 5 when are the estimated tax due dates? How about income taxes?
April 15, June 15, Sep 15, Jan 25 Income taxes are kinda pay as you go
79
Quiz 5 client buys stock in a privately held corporation. Takes substantial losses. What can the client do tax wise?
Deduct the loan interest against any other investment income.
80
Quiz 5 what can you do about the taxes in an I bond?
Defer interest and inflation adjustment until the bond is redeemed or matured in 30yrs
81
Quiz 5 What do the financial planning practice standards do?
Establish the level of professionalism expected of CFP board designees engaged in the financial planning process.
82
Quiz 5 Can bonuses and commissions be excludable from incurable comp in retirement plans?
Yes, as long as they don’t cause the plan to discriminate against non highly comp.
83
Quiz 5 When is a QDRo valid?
The best practice is that a QDRO is entered with the court at the same time as the judgement of divorce and qualified by the plan administrator.
84
Quiz 5 Client assigns the ownership of a whole life policy to her niece. How would the IRV classify the policy’s value for transfer tax purposes?
As the interpolated terminal reserve plus the unearned premium.
85
Quiz 5 what type of retirement plans listed below would a sole prop be able to max out annual contributions? 1. Keogh DB plan 2. simple plan 3. Simple 401k 4. SEP 5. Roth IRA
Keogh DB plan
86
Quiz 5 Can EE bonds owned by the parents be used for elementary, secondary, post secondary school?
Tax free for post secondary. Others would be taxable.
87
Quiz 5 What is a widows right to elect against the will?
This allows the surviving marital partner to choose whether to take half the property outright, or to take the benefits provided under the decedents will.
88
Quiz 5 What qualifies for not needing to take the RMD at 73?
Having an active qualified plan with the employer you’re currently working for, and you’re not a 5% owner. So if you have a 403b from another job, and you’re 73, you must take an RMD
89
Quiz 5 what does a reversionary interest in a trust mean and how does it impact taxes? What’s a remainder interest?
Means there’s a beneficial interest that returns back to you after a certain period. Would taint the trust for the grantor. Remainder interest is basically the beneficiary of the trust. The remainder goes to a person.
90
Quiz 5 QDTs and resident alien spouses…
1. No marital tax deduction 2. 13,610,000 Exemption amount is available to resident alien spouse. 3. JT prop, not considered jointly held. Resident alien spouse needs to prove his consideration. 4. Limited non taxed gift amount of 185k (100k indexed) Or put funds into a QDT which is similar to the C trust. Resident alien can live off of income then it would go to first spouses benes at death.
91
Quiz 5 taxes surrounding IRD
Must be included in gross income of recipient (often the estate). However, a deduction is normally permitted for estate or GST taxes paid on the income.
92
Quiz 5 if client dies owning a whole life policy insuring someone else. What amount gets included in the clients gross estate?
The interpolated terminal reserve plus the unearned premium.
93
Quiz 5 what dividend option won’t produce income from a MEC?
Dividends used to buy paid up additions
94
Quiz 5 Can ISOs be transferred by will?
Sure (because it’s after the death).They just can’t be transferred by the option holder “during” their lifetime because then they would become NSOs.
95
Quiz 5 what is the minimum required for distribution in a CLUT or CLAT?
No requirement. Unlike the Crat and Crut which is 5%, private foundation 5% min
96
Quiz 5 in order to sell her property, your client, Diana Draper must have the property graded level, seeded, and surveyed. The total cost for these services is 20k. Which of the following can you accurately tell Diana about the 20k? 1. The 20k can be expensed 2. The 20k must be capitalized 3. The 20k can be expensed using 179 deduction.
Must be capitalized. If it was used to improve the land, especially to sell, then you can add it to Basis.
97
Quiz 5 if a check is written from a jnt account (husband.wife) both agreed to gift split, made out to their daughter and the husband dies before the daughter cashes it. Whats the result?
Not an incomplete gift because 1 party is still alive. It gets recognized as a split gift form 709
98
Quiz 5 if market is going to remain flat, would you rather have a call or a warrant option?
Warrant option because the time period is much longer
99
Quiz 5 if client has 20k of company stock contributed to his esop account by his employer, then at retirement the account is distributed to a brokerage account at 200k. Then 6 months later it’s at 250k and he sells. Whats the tax ramification?
20k ordinary income at distribution. 180k LTCG at sale and 50k stcg
100
Quiz if client is 54, retires and taxes a lump sum of ESOP stock. What’s the tax ramification.
Only need to claim the basis as ordinary income but need to apply a 10% penalty
101
Quiz on an ESOP, can benes claim NUa? How?
Yes, they can elect NUA tax treatment and have 20% withheld on the basis because of the distribution.
102
Quiz if you’re not an owner and you work for two separate company’s. How can you take advantage of the qualified plans?
The employers “could” each put 69k in. The employee is limited to an aggregate of 23k in deferrals. Owners/control group have to stay in an aggregate of 69k
103
If client is under 59.5 and takes an ESOP distribution. Whats the tax situation if he doesn’t sell the stock at distribution?
Basis is treated as ordinary income plus 10% penalty. The NUA portion will be taxed at sale
104
When does a person collecting SS disability become eligible for Medicare?
After 24months or 65
105
How is Medicare part B premium calculated?
Medicare enrollees AGI over the last two years.
106
Can a self employed person deduct Medicare premiums?
Yes, as long as they are self employed
107
How is deductibles and coinsurance treated for Medicare part A hospital stays?
Days 1-60 flat deductible Days 61-90 Coinsurance per day Next 60 another deductible
108
If a couple gets divorced. Husband makes 300k wife doesn’t make anything. Wife gets custody of the kids. How is the child tax credit handled?
Because the wife has full time custody, she would get the child tax credit. But also, the husband makes to much to qualify.
109
Of the educational expense funding options top of the roadmap. Which one doesn’t allow tax free distributions for room and board?
EE bonds UTMA is tricky, because you pay taxes as the income is made
110
How much of the American opportunity credit is refundable?
Up to 40%
111
What’s another example of anchoring?
Could be anchored to a guru like Warren buffet or cramer
112
How long do I have to notify the CFP board of a felony?
30days
113
Where are complaints first addressed for the CFP board?
CFP board counsel
114
How long do you have to respond to a complaint letter to you from the CFP board?
30 days
115
How long do I have to request an extension of the 30 day window to answer the service of complaint?
20 days
116
Will the CFP board help a client get money back if they were wrong by a CFP certificate?
No, CFP board is not a regulator and also they can’t send a CFP certificate to prison.
117
When can an ISO become tax deductible for a corporation?
If the ISO becomes disqualified
118
A reverse QTIP and Dunasty trust are both good to reduce GSTT. What would determine picking between the two?
Dynasty trust must be implemented when the decedent/grantor is alive
119
If client is looking for income and growth. Would they pick a preferred stock or convertible bond?
Convertible bond. The preferred stock is basically fixed income
120
Which step in the financial planning process is making recommendations for products?
Presenting
121
For charitable gifts over 250, what does the donor need to get? For a charitable gift, what is the amount of deduction?
Over 250, need a written acknowledgment from charity. Deduction will be the lesser of DMV or basis
122
What do board of director fees count as?
SE income
123
If there are complaints, who wants to know about them?
The CFP board
124
If the client didn’t provide all the information I requested. What is the first thing I should do? Whats the second?
1st- inform the prospective client of any and all material deficiencies 2nd if still not forthcoming, then I can limit the scope of the relationship
125
If an ISO causes you to have 28k in AMT tax. What is the tax ramification on the ISO?
Increase basis by 28k
126
If you have 2 owners of a corporation. One is dying and they have no buy/sell agreement in place and life insurance isn’t an option. What do you recommend?
Enter into a cross purchase over a 10 year installment plan.
127
If clients have saved sporadically throughout the years. What type of return on their investments should we use to calculate return?
IRR/ Dollar weighted return Remember time weighted return is also geometric return
128
What’s a section 162 double bonus?
First bonus goes into the annuity/life insurance and then the second pays the employees phantom tax.
129
How long can a transfer of funds not count as a gift after a divorce?
3 years
130
What does a 2033A election accomplish? 1. It reduces the gross estate 2. It indirectly provides estate liquidity 3. It reduces the potential estate tax 4. It allows the decedent to use the AVD
1,2,3 Lowering taxes essentially increases estate liquidity.

Wrong Answer Deck (9 decks)

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