General Principles

Question 1

Sales-Related Compensation

Answer 1

Mark ups and mark downs to market makers & in conjunction with sales from inventory represent sales related compensation

Question 2

What are the exceptions to filing as an investment advisor

Answer 2

BLAT: Bank or holding co., Lawyer, Accountant, Engineer or Teacher whose advise is incidental.

Question 3

A CFP professional must report which of the following to the CFP Board within 30 days of notice of action:
A. A CFP professional did not contest a $1,000 fine to FINRA
B. A client complaint about sales practice violation and firm settled for $3,000
C. A customer alleged that the CFP professional, who is also a registered securities representative, was personally endorsing checks made out to the Broker Dealer.
D. The CFP deemed to commit a minor rule violation.

Answer 3

C. Misappropriating client’s money is a serious violation.

Question 4

Lisa is in her first year at the local university; Lisa earns about $300 per month from a part-time job and lives with her mother who does not work outside the home. Her mother receives $2,000 per month in alimony and $500 in child support. Lisa or her mother may qualify for what?

Answer 4

Subsidized Stafford Student Loan, Coverdell withdrawal, earnings, and 2503(c)

You can only do one of the following: AOC, LLC, 529, or Coverdell)

Question 5

Phil is a firefighter who is divorced from his wife, Phyllis. They were married for 10 years. Phil agreed to pay Phyllis $2,000 per month in alimony for 5 years and give her the family home in lieu of her attacking his pension. Phil owns a lawn service in addition to working for the department. He charges people $500 per month to maintain their lawns. If he agrees to mow Phyllis’ lawn and also pay her $1,500 per month PITI payment, then how much of the payment will be deductible?

Answer 5

$1,500 (services cannot be alimony, they are considered a gift)

Question 6

Kate and Ashley, twin sisters, are 19 years old. Kate is a full-time student at a local college. Ashley got a full-time job starting next year. Both of the sisters live at home with their parents. Their grandparents set up UTMA accounts for each of them that earned $3,000 in interest last year. Their parents are in the 35% marginal tax bracket. How much income tax does each of the two sisters have to pay if they had no other income?

Answer 6

Both owe $300.
UTMA Income: $3,000
Less Standard Deduction: $1,250
1,750
Next 1,250 @ 10% = 125
Next 500 at 35% = 175

Question 7

What are coincidental economic indicators?

Answer 7

1. Number of employees on non-agricultural payrolls
2. Personal income less transfer payments (e.g., Social
3. Industrial production