Missed Questions Flashcards
What is the formula for calculating self-employment tax?
Self-employment tax = self-employment income x 0.1413 (0.9235 x 0.1530)
Deductions for investment interest are limited to ___________
Net taxable investment income (interest, dividends, annuities, and royalties) (qualified dividends, capital gains, and tax-exempt interest are NOT included)
Interest paid for business use or the production of income, is deductible (for/from) AGI
For AGI
Interest paid for personal use (investment interest and qualified residence), is deductible (for/from) AGI
From AGI
Who is covered under Section II of the homeowners policies?
- the named insured and spouse
- family members residing in the household
- other persons under the age of 21 in the care of the insured
Immunization is used to reduce _____ and _____ risks in a bond portfolio
Interest and reinvestment rate risks
Chapter 11 Bankruptcy allows a business to:
Negotiate with creditors for most of the debts of the business.
Exceptions to negotiated debts include debts that are provided for in the plan of reorganization and certain nondischargeable debts.
To be on a corporation’s books as a holder-of-record, and thus have a right to the next dividend payment, the investor must purchase stock ____________
Before the ex-dividend date
Conversion Value of Bond =
= (Par / Conversion Price of security) x current market price of security
Conversion Price = current market value of security x # of convertible shares
Open market operations consists of:
Buying or selling Treasury securities depending on the Fed’s desired objective
You (can/cannot) deduct non-business casualty loss expense
Cannot
Counseling Theory - Classical Economics Approach
Clients choose among alternatives based on objectively defined cost-benefit and risk-return tradeoffs
Counseling Theory - Behavioral Approach
Planners attempt to substitute negative beliefs with positive attitudes that should result in better financial results
Counseling Theory - Economic and Resource Approach
Financial planner is considered an agent of change, and the focus is on obtaining and analyzing quantitative data
Formula - Donee’s basis when the donor has paid gift taxes
donor’s adj. basis + (unrealized appreciation / (FMV - donor’s annual exclusion amount used for gift)) x gift tax paid
The receipt of boot will result in
1) the recognition of gain if there is a realized gain
2) no recognition if there is a realized loss
Calculating AMTI:
Regular taxable income
+ positive AMT adjustments
- negative AMT adjustments
+ tax preferences
______________________________
= AMTI
Calculating AMT:
AMTI
- AMT exemption
_______________________
= minimum tax base
x AMT rate
________________________
= tentative AMT
- regular income tax on taxable income
__________________________
= AMT
This Act regulates the actions of investment advisors….
The Investment Advisors Act of 1940
This Act permits the SEC to regulate UITs, managed investment companies, and variable life products…..
The Investment Company Act of 1940
If you participate in a qualified retirement plan, can you deduct Traditional IRA contributions?
Yes, but you must abide by the phaseout limits. If your spouse does not participate in a qualified retirement plan, they can deduct the full $6,500
Probation period of a disability income policy is…..
The time the insured must wait after the issue of the policy before the specified conditions will be covered
What can you do to defer the recognition of any gain on the payout of insurance proceeds? (i.e., basis of building is $125,000, but insurance policy paid $195,000)
Insurance proceeds which exceed the current basis of destroyed property will not be taxable if the taxpayer replaces the property with similar property within a two-year period from the end of the year in which realization resumed if a natural disaster (fire) occurred, or three years from the end of the year in which realization occurred in the event of a government taking (eminent domain).
Coverdell Education Savings Accounts can be transferred to….(person)
- Brother/sister
- Step brother/sister
- Son/daughter
- First cousin