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Exam Tips Flashcards

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1
Q

Elements of financial planning

A

U– I- A - D – P – I – M

Uber is a drunk person immediate motorvehicle.

Understanding the clients, personal and financial circumstances – data gathering

Identify and selecting goals

Analyze the clients current course of action and potential alternative courses of action

Developing financial plan (prepare)

Presenting the financial planning recommend

Implementing financial planning recommendations

Monitoring and updating financial plan

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2
Q

Three panel approach

A
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3
Q

Timeline for recession and depression

A

6 months 2 quarters for a recession and 18 months 6 quarters for a depression.

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4
Q

Summary of monetary policy effects

A
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5
Q

Assets that are not discharged in bankruptcy

A

 student and government loans
three years of back taxes,
alimony and child support
monies owed to malicious acts,
drunk driving, criminal fees, and penalties or embezzlement.

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6
Q

Assets exempt from creditors

A

 homestead, life insurance, qualified plans
 Contributory, traditional, and Roth IRA up to 1 million
 bankruptcy may stay on credit report for up to 10 years

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7
Q

Debt ratios

A

28% and 36%
28% or less PITI
principal, interest, taxes, homeowners insurance .

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8
Q

Acronym for insurance Dividend Options?

A

CRAP-0

Cash options,
reduce premiums,
accumulate at interest,
paid up additions

term (One year) (5th dividend)

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9
Q

Life insurance nonforfeiture options?

A

Cash surrender value
Reduced paid up insurance
Extended term insurance

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10
Q

Taxation of disability insurance benefits

A

If employee pay premium after tax dollars premiums are not deductible benefits are tax-free.

 if employee pays premium with pretax dollars benefits to employee our taxed.

 if employer pays, the premium premiums are deductible to employer, benefits to employee our taxed.

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11
Q

What is not covered in Medicare part B?

A

Dental care,
cosmetic surgery,
hearing aids
eye exams
Routine physicals

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12
Q

Margin call formula

A

Margin Call =
Loan / 1- Maintenance Margin

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13
Q

Security regulation dates

A

1933 equals issuance of new securities
1934 regulates the secondary market of trading
1940 regulates investment companies
Security investors protection act 1970 established SIPC
1988 center trading securities

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14
Q

Money Market Securities

A

Treasury bills
Issued in maturities up to 52 weeks hundred dollar increments treasury direct

Commercial, short term loans corporations, mature, 270 days does not have to register with SEC

Bankers Acceptance, facilitates import and export retreated from nine months or less

Euro dollars : Euro deposits in foreign banks that are denominated US dollars

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15
Q

Standard deviations

A

68 95 99 +/- 1,2,3

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16
Q

Kurtosis

A

Leptokurtic = hi Peak and fat tails (higher chance of extreme events)

Platykurtic = low peak and thin tails (lower chance of extreme events event.)

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17
Q

PRIME for Systematic Risks

A

Purchasing Power
Reinvestment risk
Interest rate risk
Market risk
Exchange rate risk

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18
Q

Unsystematic Risks ABCDEFG

A

Accounting
Business
Country
Default
Executive
Financial
Government

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19
Q

Six nouns that can follow CFP

A

Professional, certificate, practitioner, certification, Mark , exam

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20
Q

Exceptions to registration

A

“The publisher was broke because she was late to US Bank”

Banks and being holding companies that are not investment companies.

Any broker dealer whose advisory services are solely incidental to the conduct of business

LATE Lawyers, accountants teachers, and engineers, who advise us incidental to the profession.

Publisher of bona fide, newspaper magazine, or periodical of regular circulation

Advisors whose advice and services is related strictly to securities guaranteed by the United States

Such person not within the intent of the law as the SEC may designate by rules, regulations or order

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21
Q

Exemptions to registration

A

Advisors whose clients reside in their state of business and who do not provide advice services analysis or reports regarding nationally listed securities

Advisors not providing advice about securities traded on a national exchange

Advisors, whose only clients are insurance companies

Advisor solely to venture capital funds

Advisors solely to private funds less than 150, million

foreign advisors without a place of business in the US

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22
Q

Monetary policy: open market operations

A

Buy securities – increase money supply – decrease interest rates

Sell securities – decrease money supply – increase interest, interest rates .

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23
Q

Technical analysts look at?

A

Dow Theory, charting, market breadth, odd lot, trading short interest.

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24
Q

Efficient market hypothesis

A

Weak form: historical info will not help, fundamental analysis will help, and inside information will help

Semi strong form: both historical and public information will not help. Both technical and fundamental do not help. Insider information will help

Strong form: theory asserts that historical and public and private information will not help. Stock prices reflect all available information. The market cannot be out performed

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25
Q

Municipal bonds three types

A

General obligation, bonds, revenue, bonds, private activity bonds.

Geo bonds are backed by the tax authority of the issuing municipality .

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26
Q

Relationship between coupon l, current yield, YTM, YTC.

A
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27
Q

The yield ladder

A

Remember that when shopping if you see a discount “call mom’s cell now!”

Discounts (from highest to lowest) is yield to call, yield to maturity, current yield, and nominal yield.

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28
Q

Bond duration

A

Duration is the weighted average maturity of all cash flows

The bigger, the duration, the more price sensitive or volatile the bond is to interest rate changes

Modified duration is a bond price sensitivity changes, interest rates

Portfolio should have a duration equal to the investors time prized to be effectively immunized

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29
Q

All assets are capital assets except

A

ACID
Accounts/notes receivable, copyright and creative works, inventory, and depreciable property use a trade or business .

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30
Q

Treatment of gains and losses for different types of assets chart

A
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31
Q

MACRS

A

CAT. 5 year property 1245
O. 7 year property 1245
R. 27.5 year property 1250
N. 39 year property 1250

Computers autos, and trucks
Office furniture
Real estate
Non residential

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32
Q

Total deductible contributions

A

Cannot exceed 50% of the donors AGI when both cash and property are donated in the same year

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33
Q

The kitty tax only applies to

A

“ unearned income” in excess of $2600

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34
Q

AMT preference items

A
  1. Percentage depletion: the amount of percentage depletion taken for regular tax and excess of the adjusted basis of the property at the end of the year is a preference item.
  2. Intangible drilling costs.
    AMT requires 10 year amortization. Intangible drilling costs are currently currently deductible for regular tax.
  3. Interest on private activity bonds.
    This interest is not taxable for regular tax purposes, but is included in income for AMT purposes
    Expenses incurred, and carrying these bonds are not deductible for regular tax purposes, but offset the interest income in computing the AMT preference .
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35
Q

ADL’s

A

Bathing
Eating
Dressing
Transferring
Continents

BED TC

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36
Q

HO section 1 coverages

A

Section 1 coverages :
Coverage A dwell
Coverage B other structures
Coverage C personal property
Coverage D loss of use

Section 2 coverages:
Coverage E personal liability
coverage F medical payments to others

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37
Q

General exclusions for all HO policies

A

Movement of ground
Ordinance of law
Damage from water
War or nuclear hazard
Power failures
Intentional act
Neglect

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38
Q

Reduction of Social Security benefits

A

5/9 of each month for the first three years that a worker retires

5/12 for each month beyond three years

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39
Q

Failure to file/pay fees

A

Failure to File = Five %
Failure to Pay equals = Point five

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40
Q

MACRS property classes

A

3 year: tractors, rent to own property

5 year: autos, computers, office equipment

7 years: Office furniture, and fixtures

27.5 year rental home

39 year: office buildings

Five and seven most likely to be tested

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41
Q

Payroll tax percentages

A

Social Security tax is 6.2%
Medicare taxes 1.45%
Social Security wage base is $168,600

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42
Q

Dividend receiving deduction percentages

A

Less than 20% ownership equals 50%
At least 20% less than 80% equals 65%
At least 80% equals 100% DRD

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43
Q

S corporation requirements

A

Cannot have more than 100 eligible shareholders
Must be US citizen
Insurance companies, domestic international sales, corporations, and certain financial institutions are not eligible for S Corp.
The corporation is allowed only one class outstanding stock

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44
Q

Good numbers to know

A

Medicare deductible part a is $1632
Social Security 1 quarter is $1730

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45
Q

Five dependency tests are:

A
  1. gross income test
  2. support test
  3. member of household or family member test
  4. citizenship test
  5. joint filing test
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46
Q

Property taxes, limited to what??

A

$10,000 itemized deduction

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47
Q

Social Security hurdles

A

Married filing jointly
32,000
44,000

All other taxpayers
25000
34000

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48
Q

ADP schedule

A
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49
Q

Qualified plan to avoid 10% penalty

A

MESS at D3Q

Medical expenses, equal periodic payments, separation from service, age, tax levy, death, disability, disaster, and QDRO

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50
Q

For IRA to avoid the 10% penalty

A

HIDE ME

Home purchase
Health insurance
Death and disability
Domestic abuse
Higher education
Medical expenses
Equal periodic payments
Age

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51
Q

Employer, chart, summarizing characteristics of qualified plans

A
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52
Q

Retirement plan numbers to know

A
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53
Q

Coverage tests

A
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54
Q

50/40 Test

A
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55
Q

Prohibited transactions from an IRA

A

Selling, exchanging or leasing of any property to an IRA

Lending money to an IRA

Receiving unreasonable compensation for managing an IRA

Pledging an IRA security for a loan

Borrowing money from an IRA

Borrowing for personal use with IRA funds

If deemed distribution is due to a prohibited transaction, then the entire balance and the IRA is treated as having been distributed .

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56
Q

MACRS depreciation CAT-CORN

A

CAT-CORN
Computers autos trucks

Office furniture is seven years

Residential real property is 27.5 nonresidential is 39 .

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57
Q

Disclaim a bequest

A

Disclaimer clause functions to remind any heirs that they can disclaim a bequest while still allowing a testator to direct the distribution of disclaimed property. To be effective…
1. The disclaiming party cannot benefit from the property.
2. Nor direct any future interest in the property.
3. The disclaiming party must disclose the property within nine months of the descendants date of death.
4. Disco must be in writing.

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58
Q

Property ownership key features

A
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59
Q

Tax issues related to trusts

A
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60
Q

AGI ceilings are all types of donations

A
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61
Q

Know your CRATS, CRUTS, PIFS

A
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62
Q

ISO vs NQSO

A
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63
Q

ISO vs NQSO

A
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64
Q

Property ownership key features

A
65
Q

Property ownership key features

A
66
Q

Property ownership key features 2

A
67
Q

Terminal interest rule

A
  1. Six month survival contingency.
  2. A terminal interest either outright or interest over which the surviving spouse has a general power of appointment
  3. A qualified terminal interest property trust (QTIP)
  4. A charitable remainder trust (crt) where a spouse is the only non charitable bene.
68
Q

Qualified plan overview chart

A
69
Q

Coverage tests

A
70
Q

Highly compensated versus key employee

A
71
Q

Social Security integration

A

$168,600
no more 6.2% above that

72
Q

Qualified plan loan example

A
73
Q

Qualified plan loan example

A
74
Q

Distributions due to death eligible designated beneficiary

A
75
Q

Deductible traditional IRA chart

A
76
Q

IRA non-qualified distributions chart

A
77
Q

Applicable, exclusion amount

A
78
Q

The gross estate

A
79
Q

179 deduction

A
80
Q

CFP board candidate fitness standards

A
81
Q

American opportunity tax credit

A
82
Q

How often do file registration

A
83
Q

Exceptions to registration

A
84
Q

VIPs are safe from exemptions

A
85
Q

Brochure rule

A
86
Q

Financial industry, regulatory authority

A
87
Q

Business life cycles

A
88
Q

Education summary phase out

A
89
Q

Coincidence example

A
90
Q

Regulating the insurance industry

A
91
Q
A
92
Q

taxation of annuities 1982

A
93
Q

Cobra

A
94
Q

Long-term care

A
95
Q

Long-term care tax benefit

A
96
Q

Long-term care, tax benefits

A

Greater than 70 years old equals 5880 maximum deduction

97
Q

Broad pearls

A
98
Q

General exclusions for all HO policies

A
99
Q

Fully insured Social Security

A
100
Q

Reduction in benefit

A
101
Q

Taxation of Social Security benefits

A
102
Q
A
103
Q

Margin call example

A
104
Q

Margin how much must be contribute

A
105
Q

Investment policy statement

A
106
Q

Price weighted versus value weighted

A
107
Q

Summary of performance measure

A
108
Q

Dollar weighted equals investors cash flow

A
109
Q

Time weighted equals securities cash flow

A
110
Q

Dividend discount model important exam tips

A
111
Q

Preferred stock Tax Advantage

A
112
Q

Intrinsic value call option

A
113
Q

Put option example

A
114
Q

Put option example

A
115
Q

Non-taxable exchanges like kind exchanges

A
116
Q

Non-taxable exchanges like kind exchanges

A
117
Q

45 days 180 days

A
118
Q

Like kind exchanges

A
119
Q

Personal use

A
120
Q

Rental use

A
121
Q

Mixed use

A
122
Q

Passive activity filter, visual

A
123
Q

Rental real estate, passive activity, losses, exception

A
124
Q

Rental real estate example

A
125
Q

Administration of the tax system, statue of limitations

A
126
Q

Tax courts

A
127
Q

Below the line deductions itemized – miscellaneous itemized deductions

A
128
Q

Deduction clustering

A
129
Q

Kiddie tax review

A
130
Q

AMT preference items

A
131
Q

Section 179 example

A
132
Q

Highly compensated

A
133
Q

Highly compensated versus key employee

A
134
Q

Pension plans, actuary

A
135
Q

Diversification requirement

A
136
Q

Diversification requirement page 2

A
137
Q

403B 15 year catch

A
138
Q

403B 15 year catch

A
139
Q

457 special catch Up

A
140
Q

83B election timeline

A
141
Q

Super annual exclusion amount

A
142
Q

Valuation of stock example

A
143
Q

Private annuities

A
144
Q

SCIN

A
145
Q

GRAT

A
146
Q

GRUT

A
147
Q

QPRT

A
148
Q

ILIT

A
149
Q

Trust for minor

A
150
Q

Q-tip/C Trust

A
151
Q

Pooled income funds

A
152
Q

CRAT

A
153
Q

CRUT

A
154
Q

CLTs charitable lead Trust

A
155
Q

Section 6166

A
156
Q

Section 2032 special use valuation

A
157
Q

Section 2032 a special use valuation page 2

A
158
Q

Options diagram

A
159
Q

Summary of HO form

A

CFP Matt (2 decks)

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