Exam Tips Flashcards by Matthew Anderson

Elements of financial planning

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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Three panel approach

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Timeline for recession and depression

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

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Summary of monetary policy effects

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Assets that are not discharged in bankruptcy

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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Assets exempt from creditors

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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Debt ratios

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

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Acronym for insurance Dividend Options?

CRAP-0

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

term (One year) (5th dividend)

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Life insurance nonforfeiture options?

Cash surrender value
Reduced paid up insurance
Extended term insurance

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Taxation of disability insurance benefits

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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What is not covered in Medicare part B?

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

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Margin call formula

Margin Call =
Loan / 1- Maintenance Margin

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Security regulation dates

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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Money Market Securities

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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Standard deviations

68 95 99 +/- 1,2,3

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Kurtosis

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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PRIME for Systematic Risks

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

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Unsystematic Risks ABCDEFG

Accounting
Business
Country
Default
Executive
Financial
Government

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Six nouns that can follow CFP

Professional, certificate, practitioner, certification, Mark , exam

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Exceptions to registration

“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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Exemptions to registration

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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Monetary policy: open market operations

Buy securities – increase money supply – decrease interest rates

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

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Technical analysts look at?

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

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Efficient market hypothesis

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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Municipal bonds three types

General obligation, bonds, revenue, bonds, private activity bonds. Geo bonds are backed by the tax authority of the issuing municipality .

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

The yield ladder

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.

Bond duration

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

All assets are capital assets except

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

Treatment of gains and losses for different types of assets chart

MACRS

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

Total deductible contributions

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

The kitty tax only applies to

“ unearned income” in excess of $2600

AMT preference items

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 .

ADL’s

Bathing Eating Dressing Transferring Continents BED TC

HO section 1 coverages

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

General exclusions for all HO policies

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

Reduction of Social Security benefits

5/9 of each month for the first three years that a worker retires 5/12 for each month beyond three years

Failure to file/pay fees

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

MACRS property classes

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

Payroll tax percentages

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

Dividend receiving deduction percentages

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

S corporation requirements

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

Good numbers to know

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

Five dependency tests are:

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

Property taxes, limited to what??

$10,000 itemized deduction

Social Security hurdles

Married filing jointly 32,000 44,000 All other taxpayers 25000 34000

ADP schedule

Qualified plan to avoid 10% penalty

MESS at D3Q Medical expenses, equal periodic payments, separation from service, age, tax levy, death, disability, disaster, and QDRO

For IRA to avoid the 10% penalty

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

Employer, chart, summarizing characteristics of qualified plans

Retirement plan numbers to know

Coverage tests

50/40 Test

Prohibited transactions from an IRA

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 .

MACRS depreciation CAT-CORN

CAT-CORN Computers autos trucks Office furniture is seven years Residential real property is 27.5 nonresidential is 39 .

Disclaim a bequest

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.

Property ownership key features

Tax issues related to trusts

AGI ceilings are all types of donations

Know your CRATS, CRUTS, PIFS

ISO vs NQSO

Property ownership key features

Property ownership key features 2

Terminal interest rule

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.

Qualified plan overview chart

Coverage tests

Highly compensated versus key employee

Social Security integration

$168,600 no more 6.2% above that

Qualified plan loan example

Distributions due to death eligible designated beneficiary

Deductible traditional IRA chart

IRA non-qualified distributions chart

Applicable, exclusion amount

The gross estate

179 deduction

CFP board candidate fitness standards

American opportunity tax credit

How often do file registration

Exceptions to registration

VIPs are safe from exemptions

Brochure rule

Financial industry, regulatory authority

Business life cycles

Education summary phase out

Coincidence example

Regulating the insurance industry

taxation of annuities 1982

Cobra

Long-term care

Long-term care tax benefit

Long-term care, tax benefits

Greater than 70 years old equals 5880 maximum deduction

Broad pearls

General exclusions for all HO policies

Fully insured Social Security

Reduction in benefit

Taxation of Social Security benefits

Margin call example

Margin how much must be contribute

Investment policy statement

Price weighted versus value weighted

Summary of performance measure

Dollar weighted equals investors cash flow

Time weighted equals securities cash flow

Dividend discount model important exam tips

Preferred stock Tax Advantage

Intrinsic value call option

Put option example

Non-taxable exchanges like kind exchanges

45 days 180 days

Like kind exchanges

Personal use

Rental use

Mixed use

Passive activity filter, visual

Rental real estate, passive activity, losses, exception

Rental real estate example

Administration of the tax system, statue of limitations

Tax courts

Below the line deductions itemized – miscellaneous itemized deductions

Deduction clustering

Kiddie tax review

AMT preference items

Section 179 example

Highly compensated

Highly compensated versus key employee

Pension plans, actuary

Diversification requirement

Diversification requirement page 2

403B 15 year catch

457 special catch Up

83B election timeline

Super annual exclusion amount

Valuation of stock example

Private annuities

SCIN

GRAT

GRUT

QPRT

ILIT

Trust for minor

Q-tip/C Trust

Pooled income funds

CRAT

CRUT

CLTs charitable lead Trust

Section 6166

Section 2032 special use valuation

Section 2032 a special use valuation page 2

Options diagram

Summary of HO form

Exam Tips Flashcards

(159 cards)