CFP - Final Push

Question 1

Who establishes and maintains margin regulation requirements?

Answer 1

The Fed

Question 2

Are retirement accounts of parents included in FAFSA calculations?

Answer 2

No

Question 3

Are retirement accounts of students included in FAFSA calculations?

Answer 3

No

Question 4

Is personal property included in FAFSA calculations?

Answer 4

No

Question 5

What is the amount allowed for the American Opportunity Tax Credit?

Answer 5

Per child:

100% of the first $2,000 of qualified college expenses

25% of the next $2,000 for a max of $2,500

Question 6

What is the result of fraud on an insurance application?

Answer 6

Misstated age: reduced benefit pro rated for the amount of premium paid

Anything else: rescinded

Question 7

Is the interest expense on borrowed money for a margin account, investment loan, or line of credit to earn investment income deductible?

Answer 7

Yes

Question 8

Do both spouses have to participate in a qualified plan to be affected by IRA deductibility phaseout rules?

Answer 8

No,

The participating spouse uses the regular phaseout amount

The non-participating spouse uses the Spousal IRA phaseout numbers

Question 9

Options payoffs are:

Futures payoffs are:

Symmetrical or Asymmetrical?

Answer 9

Options: Asymmetrical

Futures: Symmetrical

Question 10

Surviving spouse with child-in-care benefits terminate when the child reaches age…

Answer 10

16

Question 11

Which comes first when determining index annuity returns?

Annual cap %

or

Participation limit?

Answer 11

Participation limit first, then annual cap %

Question 12

What is the formula for insurance below the required coinsurance amount?

Answer 12

Amount of actual insurance / Amount required (i.e. 80%)

= New coinsurance percentage covered

Question 13

What is the formula for basis with gift tax included?

Answer 13

Basis +

(FMV - basis) / (FMV-annual exclusion) x gift tax paid

Question 14

The capital gain rate for collectibles is…

Answer 14

28%

Question 15

Medical expenses are only deductible to the extent that they exceed…

Answer 15

7.5% of AGI

Question 16

Section 121:

If you have owned and lived in a residence for more than _____ years, the proceeds from the sale of the residence is excluded from gross income to certain limits.

Answer 16

2

Question 17

Section 121 sale of a personal residence:

Max exclusion for single
Max exclusion for MFJ

Answer 17

$250,000 single

$500,000 MFJ

Question 18

If one spouse meets the 2 year rule for Section 121 sale of a personal residence and the other does not, how much is excluded from income?

Answer 18

Spouse that qualifies: $250,000

Spouse that doesn’t:
Months living at the residence / 24 x $250,000

Question 19

Are dividends paid by a company deductible?

Answer 19

No

Question 20

Personal bad debt is recognized as…

Answer 20

Short term capital loss

Question 21

Which happens as soon as you sell something?

Recognized or realized?

Answer 21

Realized

Question 22

Which happens when it is applied to your taxes?

Recognized or realized?

Answer 22

Recognized

Question 23

What is the standard deduction for kiddie tax?

Answer 23

Earned income + $350

limited to $12,000

Question 24

For gift loans greater than $10,000 and less than or equal to $100,000, no interest is imputed if the borrower’s net investment income for the year does not exceed $______.

Answer 24

$1,000

Question 25

What business can deduct passive losses against active?

Answer 25

A closely-held C corporation that is not a personal service corporation - passive losses may be used to offset active, but not portfolio income.

Question 26

If a security becomes worthless during the tax year, how is the loss recognized?

Answer 26

The loss is treated as if it occurred on the last day of the tax year.

Question 27

Under the Employer's Educational Assistance Program, an employer can reimburse an employee's tuition, enrollment fees, books, supplies, and equipment up to $_______ per year

Answer 27

$5,250

Question 28

What is the formula for coefficient of variance?

Answer 28

Standard Deviation / Return

Question 29

What is the employee and employer max for SIMPLE IRAs?

Answer 29

$12,500 employee $5,500 employer $18,000 total

Question 30

Private placements are limited to _____ unaccredited investors and ______ accredited investors.

Answer 30

35 Unlimited

Question 31

Are VEBA benefits tax exempt?

Answer 31

Yes, if they meet requirements of Section 501(c)(9)

Question 32

Transferring a life insurance policy on own life (to beneficiary or ILIT) removes the death benefit from the gross estate if they live more than ______ years afterwards.

Answer 32

3

Question 33

If the spouse is not a U.S. citizen, only the first $_______ of annual present interest gifts to them is exempt from gift tax.

Answer 33

$152,000

Question 34

What is the max Lifetime Learning Credit??

Answer 34

20% of qualified expenses up to $10,000 = $2,000 max credit PER FAMILY

Question 35

Which credit is family based and which is individual based?

Answer 35

Lifetime Learning Credit - family American Opportunity Credit - individual

Question 36

Can a taxpayer take both Lifetime Learning Credit and American Opportunity Credit for the same student?

Answer 36

No, but they can if multiple dependents are students

Question 37

What are the underpayment of estimated tax rules for prior year AGI less than $150,000?

Answer 37

Lesser of: 90% of current year tax liability and 100% of prior year tax liability

Question 38

What are the underpayment of estimated tax rules for prior year AGI greater than $150,000?

Answer 38

Lesser of: 90% of current year tax liability and 110% of prior year tax liability

Question 39

Accredited investors: Income more than $_______ (S) $_______ (MFJ) Net worth more than $___________

Answer 39

$200,000 $300,000 $1,000,000

Question 40

What is the information ratio?

Answer 40

Alpha divided by standard deviation

Question 41

Special use valuation (2032A) is for farms or closely held business that has property that makes up _____% of the adjusted value of the gross estate and real property is _____%. The decedent must have been a material participant for ____ of the last _____ years.

Answer 41

50% 25% 5 8

Question 42

If special use property (Section 2032A) is disposed of to a nonfamily member or the property discontinues its qualified use withing _____ years of the decedents death, all or part of the estate savings may be captured - exceptions exist if the heir dies or goes bankrupt.

Answer 42

10

Question 43

Deferred payment of estate tax (section 6166) can occur if the value of the closely held business exceeds ____% of the value of the adjusted gross estate.

Answer 43

35%

Question 44

Deferred payment of estate tax (section 6166) allows estate tax to be deferred for _____ years, then paid in _____ annual installments.

Answer 44

5 10

Question 45

What is the benefit of a stock redemption (section 303)?

Answer 45

The estate can redeem the decedent's shares - stepped up then sold as a capital gain rather than ordinary income

Question 46

What are the 3 conditions that must be met for a section 303 stock redemption?

Answer 46

1. Shares must be included in decedent's estate 2. Value of the stock must be more than 35% of AGE 3. Redemption proceeds cannot be more than federal and state death taxes plus deductible funeral and administrative expenses

Question 47

According to the 50/40 test, defined benefit pension plans must benefit no fewer than the lesser of:

Answer 47

50 employees 40% or more of all non-excludable employees

Question 48

No more than ____% of the employer contributions to a qualified plan can be used to purchase whole life insurance, and no more than _____% can be used to by term or universal.

Answer 48

50% whole 25% term/universal

Question 49

For defined benefit plans, the life insurance death benefit cannot exceed what?

Answer 49

100x the expected monthly benefit for the employee

Question 50

Medicaid look back is...

Answer 50

60 months

Question 51

Loss property: Gain basis & holding period

Answer 51

Donor's basis, donor's holding period

Question 52

Loss property: Loss basis & holding period

Answer 52

FMV at the time of gift, holding period begins at time of gift