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Question Bank Misses Flashcards

From the final 6 quiz blocks (110 cards)

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1
Q

How do you determine excess alimony

A

it’s the amount that exceeds the payment in the following year by $15k (or something like that)

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2
Q

split gift things to remember

A

Form 709
both spouses must file

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3
Q

Joint Life Distributions

A

Exception if employee’s SOLE BENEFICIARY is their spouse and the spouse is more than 10 years younger
they can use the joint life and last survivor tables (which have a longer distribution period)

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4
Q

Name the qualified plan types

A

Money Purchase pension plan
target benefit
profit sharing
profit sharing 401k
stock bonus/esop

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5
Q

Non qualified plans (hint: theres 5)

A

SEP
SIMPLE
SARSEP
Thrift or savings plans
403b

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6
Q

What is Net Present Value

A

it’s a calculation that discounts unequal cash flows at a required rate of return less the initial cost of the investment

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7
Q

add back items for AMT

A

property, state, city/income, and sales taxes
incentive stock option (bargain element)

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8
Q

preference items for AMT

A

IPOD
Excess INTANGIBLE drilling costs
Private activity muni bond
Oil and gas percentage depletion
Depreciation

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9
Q

Strategic vs Tactical asset allocation

A

think short term for tactical asset allocation

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10
Q

General Roth IRA withdrawal rules

A

Retirement 6-8

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11
Q

If interest rates are expected to decline what bond feature should you look out for?

A

call protection (generally 10 years)

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12
Q

If interest rates are expected to rise, what bond feature should you be on the lookout for?

A

a put feature

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13
Q

Basis of charitable income tax on stock

A

the charitable income tax deduction is generally based on the FMV of the stock as of the date when its transferred to charity

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14
Q

What are the four categories of college funding/savings vehicles that can only be used individually

A

AOC
LLC
Coverdell
529

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15
Q

collision vs comprehensive on PAP

A

Collision - “covered auto or its impact with another vehicle or object”
Other than collision -
flood, earthquake, vandalism, explosion, etc

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16
Q

if a disgruntled client worked with a b/d where should they complain?

A

they should begin the complaint process through the b/d compliance department
if they’re unresponsive or they disagree with each other, arbitration should be pursued through FINRA

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17
Q

License for ETFs

A

ETFs are traded without prospectus, therefore you must have a 7

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18
Q

basis, gifts, and gift tax paid

A

basis to a donee is increased by the gift tax paid by the donor that is attributable to the appreciation of the gift

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19
Q

how much of the child tax credit is refundable?

A

$1,600 per child

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20
Q

QBI below or above the line

A

QBI is below the line

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21
Q

QBI phase out for personal service business

A

phased out at $483,900

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22
Q

financial planning vs financial advice

A

Planning is comprehensive
advice is generally stand alone

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23
Q

ARM base rate

A

SOFR (Secured Overnight Financing Rate)
this is the base rate used for many loans and financial derivaties

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24
Q

501c9 - VEBA
What benefits can an employer fund?

A

death benefits
medical expense beenfit
disability benefits
legal expense benefits
unemployment benefits
child care benefits
severance benefits
education benefits

NOT Deffered compensation
Not retirement

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25
Coverdell ESA qualified expenses
MOST things are covered, to include: tuition fees tutoring special needs services books supplies room and board uniforms extended day programs computers/technology
26
what is provisional income
income (MAGI) plus half of their social security benefits
27
is deferred comp considered compensation for DB calculations?
Deferred compensation is not treated as compensation until it is constructively received
28
what type of trust is required to distribute its income annually?
simple trust
29
when in doubt you should _____ your client
EDUCATE
30
What happens if a grantor of a QPRT dies during the retained interest term? (question 16)
the grantor's estate is left with no greater tax liability than had the QPRT not been established
31
MEC requirement
entered after June 21, 1988 Fails to meet the 7 pay test
32
Taxation of distributions under a MEC
"interest-first" rule before 59 1/2 = 10% federal penalty tax DB is excludable from income
33
what is the 7 pay test?
excess premium paid in the first seven years
34
Elaborate on Section 415
Section 415 of the Internal Revenue Code limits the annual addition to a maximum of 100% of compensation or $69,000. The company may contribute and deduct more than 25% of salary in addition to the elective deferral of an individual employee/participant (not to exceed $69,000), providing that the plan deduction for total includible compensation does not exceed 25% (elective deferrals).
35
ISO taxation
36
Appeals of DEC rulings
ANY ruling can be appealed within 30 days of notice of the adverse ruling by mail Must submit a petition for appeal
37
Summary of liability for payments of the GSTT
direct skip = transferor pays taxable termination = trustee pays taxable distribution = transferee pays
38
integration with Social security
Target benefit money purcahse profit sharing stock bonus SEP NOT ESOP or SIMPLE
39
ER contributions for group disability (taxation)
Employer contributions for group disability insurance are generally treated as an ordinary and deductible business expense. The premiums will result in no taxable income to the employee.
40
risk of zero coupon bonds
NO reinvestment rate risk
41
Can standard deviation be negative
No
42
how many years can be used for the calculation of standard deviation on a stock?
there is no limit
43
1031 vs 1035 exchange
1031 is property 1035 is insurance
44
carryforward of charitable income tax deductions
the NEXT 5 years or until death
45
treynor vs sharpe (when to use each)
if R2 is >60 look for the highest positive alpha If no alpha then look for the highest treynor If R2<60, look for the highest sharpe
46
charitable bargain sales
the basis of the property sold to the charity for less than FMV must be allocated between the portion of the property "sold" and the portion "given" to charity (proceeds/FMV) x basis
47
what type of Employer group coverage is not tax deductible by the employer
Code section 125 Flex spending accounts -these are EE funded
48
company borrowing against cash value on key employees
a business may deduct a limited amoutn of interest each loan can't exceed $50k
49
uninsured motorist is WHAT
liability protection
50
IRA RBD
in any IRA-type of arrangement, the RBD si always 4/1 following the calendar year in which you turn 73 EVEN if you continue working
51
dollar limit that can be converted from a traditional to a roth IRA
TRICK. there isn't one
52
what types of gifts do you not need to disclose to clients?
minimal gifts like fruit and candy
53
Taxation of dividends in a MEC
become taxable when BORROWED or withdrawn
54
AOC vs LLC
AOC is per eligible student per year AOC can't be used if you have a felony drug conviction
55
What does NPV ultimately tell you?
NPV tells us whether the client achieved their required rate of return when its NPV is zero, the investment met the buyer's required rate of return AN investment can be profitable even if its NPV is negative
56
basis for an equity owner in an S corporation
capital contributed to the business and personal loans to the busienss NOT third party loans EVEN if the owner assumes personal liability for the debt
57
where do you add taxable gifts?
to the TAXABLE ESTATE, not the gross estate
58
general powers of appointment if you die with them
property subject to general powers of appointment are included in the gross estate of the holder of that power
59
monetary policy refers to activities in which the federal reserve engages to influence what?
money and credit
60
hardship loans
are NOT for IRAS there is no such thing as a hardship withdrawal on an IRA
61
SEC registered advisors with at least $100M have to file ADV updates within ___ days of the end of their fiscal year
90 *remember, if they are registered with the state (smaller firms) this is regulated at the state level
62
gross estate
Gross estate= total FMV of all property and interests "owned" or controlled by the decedent at the time of death
63
taxable estate
adjusted gross estate, less the maritial and charitable deductions
64
tax base
the taxable estate plus adjusted taxable gifts (the amounts exceeding annual gift tax exclusion)
65
what is time weighted return
geometric mean
66
why would you pick time weighted return over dollar weighted return?
to evaluate the performance of the portoflio manager
67
Key characteristics of profit sharing plans
can be integrated with social security ER can only contribute and deduct up to 25% of the overall payroll, but the individual participants could receive more than that can be age weighted contributions can be flexible
68
does the size of an insurance company matter?
no, it's about its rating, ability to pay claims, and experience of the agent themselves
69
losses from non publicly traded partnrships
passive loss loss is not deductible until the limited partner sells the interest or dies
70
losses if you're an active participant in an LLC
deducible up to basis
71
what kind of plans isn't subject to FICA and FUTA
125 plan This is a FSA
72
transfer for value rules
if an interest in a life insurance policy is transferred for valuable consideration (not a gift) Excess of the consideration paid for the policy, combined with any premiums paid by the owner, are taxable as OI!
73
exceptions to transfer for value rules
sale or transfer to: the insured partner or a partnership in which the insured is a partner corporation in which the insured is a shareholder or officer transfer of property incident to a divorce
74
K1s type of income
a K1 from an S corporation represents a distribution of profits and is treated as INVESTMENT income, not earned income
75
recapture tax if you stop 72t early
10% of the total annual payments received before age 59 1/2, plus interest
76
if someone has a family, what things should we address first?
insurance, specifically life and disability
77
social security reduction in benefits
During FRA year ONLY, you lose $1 in benefits for every $3 above the threshold Before that it's $1 for every $2 earned
78
gifts of appreciated property
carryover basis annual gift exclusion doesn't effect basis gift taxes only adjust basis if the property appreciated
79
What is generally included in a corporate annual report?
depreciation methods stock otions inventory methods outlook for the firms products in various industires NOT profit projects as these could be misleading
80
prepaid tuition plans
only cover tuition and fees NOT room and board affect the EFC
81
HO 15 basics
increased limits on property and higher sublimits on jewelry and furs
82
gift of stock if it hasn't appreciated
at the time the stock is gifted, if it hasn't appreciated, the gift tax paid cannot be added to the basis
83
are coverdell contribtuions deductible?
no
84
is a coverdell contribution a gift of present or future interest?
it's a gift of present interest
85
uni (solo) 401k
allows up to $76,500 in contributions, making it superior to SEP and target benefits This requires eligibility of course
86
when should you apply for medicare?
3 months before your 65th birthday
87
how is the medicare part b premium calculated
Enrollee's AGI two years prior
88
deductibility of medicare premiums
above the line deduciton if you're self employed otherwise it would have to be itemized on your schedule a and be >7.5% of agi
89
medicare part a inpatient care
days 1-60 medicare pays all but a flat deductible amount beginning day 61, the parient is responsible for a daily copay
90
stock redemption (entity purchase) vs Cross purchase (stockholder purchase) Who owns the policy?
EP - Corporation is the owner and beneficiary SP - life insurance is required by each shareholder on the lives of each other
91
what does the CML tell us
the expected return on a full diversified portfolio It should fall somewhere along the CML
92
HSA and LTC
HSAs can pay for qualified LTC premiums (age based) Remember, not allowed in FSAs
93
in regard to the SML, beta is what?
a variable on the horizontal axis
94
taxation of life insurance surrender gain above baiss
always taxed as ordinary income
95
1244 - limits
$100k MFJ $50k single
96
life settlements and taxes
look for the LTCG answer premium paid - cost of insurance = basis cash received - basis = rec. income
97
purpose/goals of immunizing a bond portfolio
to reduce the bond portfolios market losses to earn a specific rate or return over time to offset interest rate risk with reinvesemtn rate risk
98
taxation of section 162 insurance premiums
section 162 disability insurance ER deducts the premiums ee recognizes premiums in income benefits are tax free to the employee
99
50% organizations
public charities churches schools hospitals charitable, religious, educations, or literary purposes or for the prevention of cruelty to children and animals
100
30% organizations
private charities private nonoperating foundations fraternal orders war veterans orgs
101
spousal death benefits for social security
if your spouse dies and you qualify you get the greater of your benefit or their benefit
102
what is conduit income?
sole props general partnerships subchapter s corps
103
S corp FICA and FUTA
cash distributed by an S corporation is nontaxable return of invest that reduces basis not subject to FICA or self employment taxes SALARY of an S corp owner is subject to FICA and FUTA
104
HO6 and coverage A
technically $5k of loss assessment coverage
105
A section 179 election is best described as
an election to expense the cost of certain assets and it's available for tangible personal property (1245)
106
vaccines covered under medicare part b
annual flu shot and pneumonia shot
107
SCIN basics
Self-canceling installment note PV of remaining payments are included in owner's estate gain is capital gain
108
tax free scholarhip for what expenses
books tuition course related fees equiment supplies REQUIRED FOR A COURSE
109
QDRO
qualified plans NOT IRAs
110
TIPS
principal of TIPS can go up or down pays a fixed rate of interest every six months until they mature interest amount also varies

CFP - Review Cards (17 decks)

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