Stray Stuff Flashcards
Does NII Tax include tax-exempt income?
No!
If you buy options out of the money and you own the stock, what’s that called?
Naked call writing. Because you’re out of the money. It’s covered call writing if the option is in the money.
Family Limited Partnership - if you distribute to a kid, is it taxable?
It is to the kid. The gift tax exemption does not apply.
Are forgiven student loans taxable?
Yes (unless it’s a public service loan)
If you create a partnership and you donate property to it, is your basis the FMV or the property or the basis of the property?
The basis.
When you die, what % of your retirement assets go into your estate?
50%. EVERYTHING is 50%, no matter what. The retirement thing is true because joint assets were used to fund retirement accounts.
EE Deferrals: Max? catchup?
$23k and $7.5k (it’s on the sheet, but still…)
Fair Credit Act?
Right to know what’s in your credit report
Consumer Credit Protection?
Right to know the costs and terms of credit (aka “truth in lending”)
what is the Equal Credit Opportunity Act?
Right to fair opportunity to get credit
Intrinsic value of an option is what?
MP-EP for a call. The rest is time premium.
Annuitization - which form gives the highest income? Life - 20 year certain or Life Only?
Life only will give the highest income but you might die before you collect!
Under SEC Rule 415, how long do companies have to issue shares from their IPO filing?
2 years
If you own life insurance on somebody else, but you die, does that life insurance go into probate?
Yes.
If you filed MFS and your spouse died, can you file MFJ in that year?
Yes.
With a 1031 exchange, how many days to you have from the date of transfer of your original property to identify your next property?
45
With a 1031 exchange, and you’ve transferred your property, how long do you have to complete the transfer of the new property?
180 days.
SS discount if taken 5 years early? 3 years early?
30%; 20%
Social security is taxed on Provisional Income. What’s the formula for provisional income?
AGI + tax-exempt interest + 1/2 SS benefits
What’s the tax bracket for taxes on Social Security benefits?
MFJ: 50% $32-44k, 85% $44k+
Single: 50% $25-34k, 85% $34k+
Wash sale rule?
You can’t buy the same security 30 days before or 30 days after the day of the sale. That’s a 61 day window (-30, 0, +30).
Which is the measure of total risk: std dev or beta?
SD
Is a QDRO distribution to someone under 59.5 subject to taxes and 10% penalty if not rolled over?
No penalty. Just ordinary income.
Special Needs Trust basic needs?
Food, shelter, clothing
Special Needs Trust supplemental needs?
Phone, entertainment, education, special equipment, medical needs
What’s an option collar?
It’s to hedge the stock without the cost of premiums. Own stock, sell call, buy put. No cost hedging.
What’s Straddle and Spread used for?
Straddle is for high volatility, Spread is low volatility.
Section 1031 Gain Exclusions - what’s the rule?
1 must own, 2 must live. If they have to move for a good reason before the 2 years, calculate the exclusion per person based on how long they’ve EACH lived there ($250k each max). One might get $250k, the other a partial.
If your spouse dies leaving you with little kids how do you file this year and beyond?
Year of death MFJ. The next 2 years you do QW then HOH if you have minor kids.
Expected Family Contribution amounts: Assets and Income, Parent and Kid
Assets: 5.64 and 20
Income: 22-47 and 50 (over $9,410)
On the Statement of Financial Position (aka Balance Sheet), are Annuities and CV Life Insurance considered Invested Assets?
Yes.
If you or your firm needs to report any changes to your clients (like bad boy stuff), how many days do you have?
90 days.
What’s the latest you can start a SEP for 2024?
When you file your taxes, even if that’s 9/15/25 with extentions.
What’s Section 1231 property?
Property that’s used in a trade or business
for production of income
In a GRUT, who pays the taxes and at what tax rate?
Grantor pays at ordinary income tax rates.
SEP IRA Eligibility?
21, employed last 3 of 5, make over $750
Simple IRA Eligibility
$5k pay in any of prior 2 years and will make that this year.
Under the provisions of the Equal Credit Opportunity Act, a potential borrower must receive a response from a creditor within _________ after an application indicating whether the request has been approved or denied.
30 days
For 529 puposes is a step sibling considered part of the family if the parents want to change the beneficiary to them?
YES.
What’s the Gift Tax Adustment Formula?
gift tax paid TIMES
appreciation / (MV - 18k)
When a kid gets an inherited IRA, what is the RMD for him?
Over lifetime until age 21 and then 10 years.
Net Unrealized Appreciation - when do you get hit with LT capital gains tax? When you move the shares out of the plan or when you sell?
When you sell.
You do owe ordinary income tax on the cost basis in the tax year of the distribution.
In a DDM where there is a 2 year growth rate and then it changes in year 3, how do you set up the CFs?
Year 2 includes two components: Year 1 X stage 1 growth rate PLUS terminal value based on stage 2 growth rate. So…
Year 1 is CF1
Year 2: CF2 = CF1*new growth. So it’s
CF2 + CF3/(r-g)
In an ILIT, when do beneficiaries get Crummey Powers?
When it’s NOT funded.
In a funded ILIT, does the trust pay the tax or does the grantor pay the tax?
Grantor.
If the CFP Board issues you an administrative order of suspension, what’s the minimum time you’re suspended?
1 year.
Property transferred to a spouse by QTIP - do you get the marital deduction? Do you get it out of your estate?
Yes and Yes.
If you gift TIP, do you remove it from your estate?
Yes
If you gift TIP, is it includable in the spouse’s estate?
No.
If your spouse isn’t a US citizen and you don’t have a QDOT trust, is there a marital deduction?
No. You’re completely fooooked. Your estate will be your $20MM or whatever and no marital deduction, so fork over 40% on your $20MM! Your spouse will get the rest.
Capital preservation / Purchasing Power Preservation steps
Step 1: Do you need to inflate today’s retirement needs by inflation? If so, do that to get retirement year 1’s expenses.
Step 2: What do you need on day 1 of retirement to fund your expenses? Calc the PV (use inf adjusted return if the annual expenses need to grow with inflation). BEG.
Step 3: What’s the PV of that FV from step 1? Use the same # of years in retirement, use nominal return for i (use inf adj return for PPP). BEG.
Step 4: Add Step 2 and step 3
529 disability qualifications : how many months do you have to be expected to be disabled?
12+ months
What’s the max you can contribute to a PS plan for a 50+ person?
$69,000 + 7,500.
For FDIC insurance, is a joint account for $100k between 2 people $100k for each or $50k for each?
$50k each. You split the deposit amount.
What is the definition of being “active” in a real estate property?
You own 10%+ and you have “substantial involvement” in the management of the property. THERE ARE NO HOURS THE DEFINITION.
Full Property ownership, active. You lose money. What’s the limit and the MAGI phaseout?
$25k max. MAGI phaseout is $100-150k
Does a QDRO apply to just qualified plans or all plans?
All plans.
Taxes - negligence penalty? Fraud?
20% / 75% of tax deficiency
Calculate the Medicare tax on $300k pay MFJ
$250k * 0.9235 * 2.9%
PLUS
$300k * 0.9235 - $250k limit * 0.9%
what’s more liquid: marketable securities or accounts receivable?
Marketable securities
Who’s subject to SS reductions: current spouse, kid, former spouse?
Current spouse and kid can be reduced but not the crazy ex-spouse. Really. WTF.
Rule on Roth IRA distribution?
Tax and penalty on early Roth IRA distribution?
If you meet no exceptions and it’s been open <5 years:
Earnings: ord inc tax and 10% penalty
Contributions: come out tax-free
Rule on Regular IRA distribution?
Tax and penalty on this?
If it’s allowed, all distribution is ord inc
Otherwise it’s:
Earnings: ord inc tax and 10% penalty
Contributions: ord inc tax
Rule on ER plan withdrawal?
Tax and penalty on this?
If it’s allowed, it’s ordinary income tax. No penalty.
Otherwise, if you don’t roll it over, it’s 20% withholding and 10% penalty on the whole withdrawal.
When are you allowed to take a distribution from an ER plan without penalties?
Over 59.5
Medical expenses over 7.5% of AGI
Death/Disability
Equal payments over 5 years
You’re 55+ and you leave your company
When are you allowed to take a distribution from an IRA without penalties?
Over 59.5
Medical expenses over 7.5% of AGI
Death/Disability
Equal payments over 5 years
College Education
Pay health insurance premiums if unemp
$10k for first time home buyer
Rule on annuity/MEC withdrawal?
Withdrawals come out earnings first
If annuitizing tax free part is basis/(ann pmt X life expectancy)
If you don’t meet the exceptions, early withdrawals have 10% penalty and ord inc tax on the earnings.
When are you allowed to take a distribution from an annuity/MEC?
Over 59.5
Death/disability
Equal pmts over 5 years (annuity only)
Immediate non-qual annuity (annuity only)
Rule on Simple IRA withdrawal?
If under 59.5, 25% if in the first 2 years of the plan.
