Missed Questions Flashcards
How is ‘ER match in form of ‘ER securities taxed?
- can qualify for NUA
- taxable as ordinary at distribution
- LTCG at sale if NUA
do you need to disclose 2nd DUI conviction of Board is deciding whether to suspend or revoke?
Yes; disclose anything that might impact client’s decision to engage
who receives proceeds if decedent dies while life insurance policy was pledged as collateral for a loan?
what are the tax implications?
- Lender gets loan repayment amount and no tax implication
- beneficiaries get remainder
what does each value stand for in 300/500/250 for insurance?
bodily injury per person/
bodily injury per accident/
property damage
who is responsible for ensuring RMDs are taken?
planner and client
in what step of the financial planning process would a CFP create a statement of financial position?
Step 3: Analyze
are funds held in a university’s 457 subject to creditors of ERs or EEs?
ERs yes because a university is private? another question said no because it’s in a trust so who knows
EE no because EE doesn’t have access to the funds
can a SIMPLE allow loans?
Yes, if it is a SIMPLE 401k
NOT SIMPLE IRAs
how to calculate what disability insurance will pay on a residual disability policy
(original salary - new reduced salary) x % covered
E.g., was $12K/mo, now $5K/mo and 60% policy will pay $4200 = $7K x 60%
are loans available from an IRA?
no
what action will the Board take if a CFP files bankrupty due to medical bills from car accident
nothing if proven that it wasn’t the result of inability to manage
I.e., no letter of admonishment, no revoke, no suspension, no disciplinary proceeding
is an ER match in a SIMPLE limited to covered comp?
Yes for 401k
NO for IRA
how is the exercise and sale of an ISO taxed if it doesn’t meet NUA holding period requirement?
- nothing at exercise
at sale: - ordinary income = exercise price - grant price
- STCG = sale price - exercise price
- ER gets deduction in same amont as ordinary income
what is a prospectus used for?
to disclose expenses a client will incur
are capital losses an above the line or below the line deduction?
Above the line
how is ER match as
monetary policy actions vs fiscal policy
monetary: buy government securities, decrease rate on excess reserves
fiscal: increase tax rate, decrease government spending
how is 5-year property under MACRS depreciated?
The convention is double declining balance (DDB) half year first year and switch to straight line when straight line would be preferable to DDB.
- 1st Year is 100% / 5 × 2 = 40% × ½ = 20%
- 2nd Year is (100% - 20%) × 40% = 32%
- 3rd Year is (100% - 52%) × 40% = 19.2%
etc.
what is the benefit of meeting the holding period requirement for NUA?
- the entire gain (sale price - grant price) is taxed as LTCG
vs - being taxed partially as ordinary income (exercise price - grant price) and capital gain (sale price - exercise price)
is a written agreement required when engaging in financial advice without financial planning?
No
Only privacy policy must be in writing
what does the disciplinary committee rely on to determine whether practice standards have been violated?
Code of Standards
what is the max that can be contributed to a Coverdell ESA in a year?
$2K
who is required to provide COBRA?
ER with 20+ EEs
how much of a premium can be charged for COBRA?
2%
