General Principles

Question 1

Appeal Process of Adverse Ruling with DEC.
What? When? How Many Times?

Answer 1

What? All rulings may be appealed
When? 30 days to apply for appeal after ruling
How Much? Only one opportunity to appeal

Question 2

Requirements to use CFP Mark

Answer 2

Pass Exam; 3 years of Experience; Application (Terms and Conditions & Ethics Declaration); CFP Background Check for fitness

Question 3

At what value are items shown on statement of financial position?

Answer 3

Current FMV

Question 4

What agency regulates brokerage companies?

Answer 4

FINRA. The SEC governs FINRA, but FINRA does all of the regulating.

Question 5

Education Tax Credits and Deductions

Answer 5

• American Opportunity - Life Time Learning - Student Loan Deductions

Question 6

Characteristics of American Opportunity

Answer 6

Credit is dollar for dollar for the first $2000 spent on qualified education expenses. PLUS 25% for the next $2000 spent. Maximum credit is $2500.

Phase-out is on tax table

Expenses Paid by grants or scholarships do not qualify

Question 7

Lifetime Learning Credit

Answer 7

Student Not Required to be pursuing a degree. They are a life time learner!

Undergrad or Grad school

20% of first 10,000. Max credit of $2,000

Question 8

Student Loan Interest Deduction

Answer 8

Above the line to certain taxpayers

Max deduction is $2500

Phaseouts on tax table

Question 9

Financial Aid

Answer 9

PePePaSuSu

Pell Grant

Perkins Loan

Parent Loan Undergrad

Subsidized Stanford

Supplement Ed Opp Grant

Question 10

Pell Grant

Answer 10

• $6,000 per year
• Undergrad at least 6 hours
• Use EFC Formula

Question 11

EFC Formula

Answer 11

Financial Need = Cost - Expected Family Contribution

Question 12

Parent Loan Undergrad Students
PLUS

Answer 12

• Parents can borrow the entire cost of college including tuition and living expenses
• non-need based. Anyone can apply.
• Must meet federal standard of credit worthiness

Question 13

Subsidized Stafford Loan

Answer 13

Available based on EFC, Pell grant eligibility & aid from other sources.

Question 14

Supplement Education Opp Grant

Answer 14

Available to Pell grant recipients up to $4,000/Year

Question 15

Punitive Damages

Answer 15

• Punish. Funds to punish wrongdoing.
• Generally taxable unless being paid to a beneficiary in conjunction with wrongful death.

Question 16

Compensatory Damages

Answer 16

• Damages from physical injury or sickness
• Generally tax-free
• Damages received from discrimination are taxable up to medical cost required. That would be tax free.

Question 17

Sequence of Initial Registration to sell certain Equity based products

Answer 17

1. Associate with B/D
2. Register with FINRA
3. Pass Exams
4. CRD#

Question 18

How does obtaining a mortgage affect a client’s financial statement?

Answer 18

Both assets and liabilities increase.

Question 19

Deductibility of Home Equity Loan

Answer 19

Home equity loan interest payments are deductible only for home improvement. Anything else is not deductible.

Question 20

Deductibility of Mortgage Interest

Answer 20

750k MFJ
325k Single

Question 21

Chapter 7 Bankruptcy
- Non-Cancellable Debts
- Monthly Net Income Limitations

Answer 21

Permits a debtor to claim either the federal exemption or exemptions available under state law.
- NC Debts
Student Loans
Wage withholds and income tax due
Child support and alimony
- Avg Monthly Net Income less than 6k
- If between 6 & 10 thousand net income < 25% of non-priority debt

Question 22

Ways to Write CFP Marker?

Answer 22

CERTIFIED FINANCIAL PLANNER with Trademark sign
CFP with Registered sign

Question 23

Commingling Client Funds

Answer 23

• May not commingle client money or property with funds of FP Firm
• Client funds can be commingled in a common client investment account

Question 24

Life insurance or emergency fund first?

Answer 24

Life insurance