Bentley - CFP MC
Bernard made a gift of $500,000 to his brother in 1997. At the time of the gift, the applicable gift tax credit was $192,800, but due to Bernard's prior taxable gifts he paid $200,000 of gift tax. When Bernard died in 2017, the applicable gift tax credit had increased to $2,141,800. At Bernard's death, what amount related to the $500,000 gift to his brother is included in his gross estate?
$0
A tenancy by the entirety may be terminated in which of the following ways? 1. Death, whereby the survivor takes the entire tenancy. 2. Mutual agreement. 3. Divorce, which converts the tenancy into a tenancy in common or a joint tenancy. 4. Severance, whereby one tenant transfers his or her interest to a third party with or without the consent of the other tenant.
1 2 3
Of the following types of ownership, which is available for married couples? 1. Tenancy by the entirety. 2. Tenancy in common. 3. JTWROS. 4. Tenants by marriage.
1 2 3
Which of the following is an undivided ownership in the property that, upon death of one owner, automatically passes to the surviving owner? 1. Tenants by the Entirety. 2. Tenants in Common. 3. Community Property. 4. Joint Tenancy with Rights of Survivorship.
1 and 4
Which of the following tasks are the primary responsibilities of the personal representative of an estate? 1. Inventory the estate. 2. File income tax returns for all beneficiaries. 3. Contest payment of all debts of the estate. 4. Probate the will.
1 and 4
Which of the following techniques can be used to lower the value of an individual's gross estate? A Totten Trust. A Qualified Personal Residence Trust. A Family Limited Partnership. An Irrevocable Life Insurance Trust.
2 3 4
What is the maximum amount of annual income a client should spend on PITI on an annual basis?
28%
Approximately how many months will it take Damon to break-even on a mortgage refinance strategy if the total cost of the refinance is $5,350 and: Damon's current mortgage payment is $1,626 per month The new mortgage payment is $1,446 per month
30 months - 1626-1446 You save 180 months a month... 5350/180 = 30 months
You have to work ? quarters or ? years to be eligible for social security
40, 10
A CFP® professional who is providing financial planning must complete the first ??? steps of the financial planning process.
5
What is the full retirement age?
67
Mario's executor determined that the estate tax liability for Mario's estate is $600,000. However, Mario's executor forgot to file the estate tax return and filed and paid 65 days late. Calculate the penalties that Mario's estate will now have to pay.
90k
This estate planning tool will cause assets to be included in non-grantor holder's gross estate:
A general power of appointment that is unexercised
Which of the following is included in the definition of estate planning? 1. Asset management. 2. Accumulation of wealth. 3. Asset preservation.
All
A person or entity entitled to act on behalf of another is known as:
An attorney-in-fact.
Clay would like to determine his financial needs during retirement. All of the following are expenditures he might eliminate in his retirement needs calculation except: A)The $200 per month he spends on drying cleaning for his work suits. B)The $1,500 mortgage payment he makes that is scheduled to end five years into retirement. C)The FICA taxes he pays each year. D)The $2,000 per month he puts into savings.
B Clay would not eliminate his mortgage since it will not be paid off at retirement. He would eliminate the dry cleaning expense, FICA taxes, and savings expense since he would most likely no longer have these expenditures during retirement.
If Priscilla died with each of the following property interests, which will be excluded from her probate estate? A)Property owned as community property. B)Property held tenancy in common. C)Death proceeds of life insurance payable to a living stranger.
C)Death proceeds of life insurance payable to a living stranger. Rationale All except c are included in a decedent's probate estate. Life insurance and other death proceeds are included in the decedent's gross estate, but are not included in the decedent's probate estate.
Lisa made the following transfers during 2017: 1. $17,000 to her grandson for his law school tuition. 2. $1,000 to her neighbor to help him pay a hospital bill. 3. A transfer of property valued at $100,000 to a GRAT. Lisa retained an annuity valued at $40,000 and her daughter is the remainder beneficiary. What is the total amount of Lisa's taxable gifts for 2017? A. $48,000. B. $60,000 C. $63,000. D. $65,000.
C. $63,000.
During the year, Edward created a trust for the benefit of his five children. The terms of the trust declare that his children can only access the trust's assets after the trust has been in existence for 20 years and the trust does not include a Crummey provision. If Edward transfers $100,000 to the trust during the year, what is his total taxable gift for the year? A. $0. B. $30,000. C. $60,000. D. $100,000.
D
The Generation Skipping Transfer Tax (GSTT) has all the following characteristics, except: A. GST gifts to direct skips qualifying for the annual exclusion are not subject to the tax. B. Assets transferred to a trust that has a grandchild as the sole beneficiary may be subject to both gift and generation skipping transfer tax. C. If all the children of a trust are grandchildren (whose parents are living) of the grantor then the trust is subject to GSTT. D. A 'skip person' is a person who is one or more generations younger than the transferor.
D
The unrestricted ability to ultimately name beneficiaries of income and corpus of a trust is known as:
D)A general power of appointment.
Enrique does not want to write a will. It upsets him to contemplate his own death and he simply desires to avoid the estate planning process. All of the following are risks Enrique's estate may face due to Enrique's inaction, except: A)Enrique's property transfers contrary to his wishes. B)Enrique's estate may face liquidity problems. C)Enrique's estate faces increased estate administration fees. D)Enrique's estate faces increased debt payments for outstanding debts at death.
D)Enrique's estate faces increased debt payments for outstanding debts at death.
Beibei decides to prepare his will, but does not want to seek the help of an attorney. Beibei handwrites, signs and dates all of the provisions of the will but does not have it witnessed by anyone. What type of will does Beibei have, if any? A)None. B)Nuncupative. C)Self Prepared. D)Holographic
D)Holographic
Which document appoints a surrogate decision-maker for health care?
Durable power of attorney for health care.
If a decedent dies without a will, they have died _____.
INTESTATE
Maxine is terminally ill. Her doctors gave her twenty-four months to live thirty-six months ago. Maxine has decided that she does not want to be placed on life support. Which document will direct Maxine's doctors to refrain from putting her on life support?
Living will. Rationale Only a living will would give the doctors the ability to refrain from placing her on life support. A living will, also known as an advance medical directive, is an individual's written last wishes regarding sustaining life. It establishes the medical situations and circumstances in which the individual no longer wants life-sustaining treatment. Neither a power of attorney nor a durable power of attorney would give the ability to end life-sustaining treatment.
The Federal Reserve is tasked with:
Maintaining low inflation and maintain high national employment
A spendthrift clause...
Protects the trust assets from the claims of the beneficiary's creditors.
Roger gave (gifted) his daughter a home valued at $750,000 four months prior to Roger's death. When the daughter sells the house, what will be her basis in the property?
Roger's original basis
Which type of will complies with the statutes of the domiciliary state and is drawn by an attorney?
Statutory
Before calculating a client's tax liability, a financial planner must first
Subtract expenses for AGI and reduce income by SD/itemized
A client's relationship with others and money can be identified by assessing the client's
Temperament and personality
Clyde and Bonnie have been married for six years. They are about to buy their first home and have come to you with some questions that they have regarding titling of the home. In your explanation of the different property ownership arrangements, which of the following titling structures can only be entered into by spouses?
Tenancy by the entirety.
"After finding out what Ashley had done, Bill terminated his working relationship with Ashley and requested that she return all documents about his account immediately. Bill went on to bring a civil suit against Ashley. If one year goes by before she notifies CFP Board, is Ashley in violation of CFP Board's Code of Ethics and Standards of Conduct?"
Yes, because she has thirty days from the date she learned of the lawsuit to inform CFP Board.
All of the following are principles of Modern Portfolio Theory EXCEPT: a. Markets are inefficient b. Returns are determined by risk c. Investors are rational d. The mean-variance portfolio theory governs
a
In preparation for retirement, Kevin is exploring his Social Security and Medicare insurance coverage options. Which of the following is a benefit provided by Medicare? a. Hospice benefits for terminally ill persons. b. A stop-loss limit for annual medical expenses in excess of $2,500. c. Coverage for custodial care. d. Coverage for non-prescription drugs.
a
Kevin is considering purchasing a twelve-year-old pickup truck for use when he goes hunting. The truck that he has his eye on has 90,000 miles but is in generally good condition. If Kevin's insurance goal is to decrease the annual premium while retaining appropriate coverage, which of the following insurance coverage(s) should Kevin exclude when purchasing an insurance policy for this truck? I. Part A—liability coverage. (if you hit someone) II. Part B—medical payments coverage. (if someone is in the car) III. Part C—uninsured motorist coverage. (if someone hits you and they were uninsured) IV. Part D—damage to insured's auto coverage. a. IV only b. II and IV only c. I, II, and III d. I, III, and IV e. II, III, and IV
a
Which of the following best describes the cognitive bias herding? a. Individuals that mimic the actions or decisions of a larger group, even though the individual may not have necessarily made the same choice. b. A propensity of investors to believe that they can outperform the market based on their beliefs or skills. c. Attaching one's thoughts to a reference point even though there may be no logical relevance or it is not pertinent to the issue in question. d. People tend to filter information and focus on information supporting their opinions.
a
Which of the following items will be retitled through probate? A)A house subject to a mortgage and owned fee simple (sole ownership) by the decedent. B)1/2 of real estate held tenancy by the entirety. C)Bank accounts titled as joint tenants (JTWROS).
a Rationale Options b and c will not pass through probate because they pass by operation of law. Option a will pass through probate because it is owned fee simple by the decedent. The fact that the house is subject to a mortgage does not affect whether it passes through probate.
Which of the following constitute incidences of ownership in an insurance policy: 1. The right to name or change the name of the beneficiary. 2. The right to surrender the policy. 3. The right to assign the policy. 4. The right to borrow cash from the policy.
all
All of the following are true regarding financial advisers EXCEPT: a. Advisers should strive to be active listeners throughout their sessions with clients. b. Advisers should only use open questions during their client meetings. c. It is important for the adviser to understand the client's values and attitudes. d. Nonverbal cues, or body language, can communicate feelings and attitudes between the client and the adviser.
b
During your meeting with your client you recommended she purchase a personal liability umbrella policy (PLUP). Which part of the financial planning process were you engaged in? a. Implementing the Financial Planning Recommendations b. Presenting the Financial Planning Recommendations c. Identifying and Selecting Goals d. Monitoring Progress and Updating
b
If Sonya were to die today, which of the following is true in relation to the $250,000 universal life insurance policy owned by Kevin? a. Kevin will continue to own the policy for the benefit of Wilbur. b. Kevin will be deemed to have made a taxable gift of the life insurance proceeds to Wilbur. c. Kevin will receive an amount equal to the cash value, while Wilbur will receive the remainder of the life insurance value as a tax-free gift. d. Kevin will receive the proceeds of the policy. e. Kevin must include the $250,000 face value of the policy as an asset when he calculates Sonya's gross estate.
b
Maria Chen has been a client of yours for many years. In your quarterly meeting with Maria, you evaluate her retirement portfolio performance and ensure that progress is being made as expected. Which part of the financial planning process are you engaged in? a. Understanding the Client's Personal and Financial Circumstances b. Monitoring Progress and Updating c. Implementing the Financial Planning Recommendations d. Developing the Financial Planning Recommendations
b
The Shims are curious about the alternatives available when planning for possible nursing home care costs in the future. Which of the long-term care insurance strategies listed below is an appropriate financial planning alternative for the Shims? I. Use the living benefits provision within an accelerated death benefit rider available in the universal life insurance policy. II. Purchase a life insurance policy that has a long-term care insurance endorsement. III. Systematically save for future health care costs and use Medicare as the primary insurance coverage for long-term care expenses. IV. Use Medicaid coverage for long-term care expenses after age sixty-five. a. II only b. I and II only c. II and III only d. III and IV only e. I, II, and III only
b
Which of the following would meet the requirements for the annual exclusion under the gift tax rules? A) A gift to a trust, to be distributed to a beneficiary contingent upon the beneficiary's survivorship. B) A gift to a trust that has an ascertainable value at the time of the gift. C) A gift to a secular (not a 2503c trust) trust that does not require annual income distribution to be beneficiary. D) A gift to a trust where the grantor can benefit from current income.
b
Assume Abed purchases an HO policy with a maximum insurance replacement limit of $150,000. Also assume that his house has a replacement value of $200,000. If he has a $40,000 loss, how much will he receive as a reimbursement (exclude the deductible for this problem)? a. $0 b. $37,500 c. $40,000 d. $150,000
b 150K/80% of 200K = .9375, the loss is 40K, policy will only pay 93.7% of loss
Ashley deposits $1,500 into an account at the beginning of each year. If she earns 5%, compounded annually, how much will the account be worth in 17 years? a. $38,760.55. b. $40,698.58. c. $41,386.96. d. $48,078.68.
b Response Feedback:, Begin ModeN = 17i = 5PV = 0PMT = <1,500> FV = $40,698.577
George, age 40, is married with two daughters. His primary goals include saving for retirement, paying down the mortgage on his new home, managing his risks, and education funding for his daughters. Which phase(s) of the life cycle approach is George most likely in? a. Asset Accumulation Phase only. b. Asset Accumulation and Conservation/Risk Management Phases. c. Conservation/Risk Management Phase only. d. Conservation/Risk Management and Distribution/Gifting Phases.
b Response Feedback:, George is in both the Asset Accumulation Phase and the Conservation/Risk Management Phase. He most likely has medium-to-high debt, which is indicative of the Asset Accumulation Phase, and increased insurance needs, which is consistent with the Conservation/Risk Management Phase.
Ella purchases a new house for $300,000. She put 20% down and will finance the rest over 15 years at 4.5%. What is her monthly payment? a. $1,829.12. b. $1,835.98. c. $1,921.35. d. $2,294.98.
b Response Feedback:, PV = 240,000 (300,000 x 80%)FV = 0i = 0.375 (4.5 ¸ 12)N = 180 (15 x 12) PMT = $1,835.98
Help Abed calculate his monthly PITI payment, based on the following facts: • He currently earns $66,000 per year. • The loan has a 4.5 percent annualized APR. • The loan is a thirty-year mortgage (fixed rate). • $200,000 loan amount. • $150 monthly HO insurance premium. • $300 monthly HO tax. a. $1,013 b. $1,463 c. $1,540 d. $3,278 does Abed meet the front-end mortgage qualification rule?
b. $1,463 add back in 150 and 300 Yes, because his monthly PITI is less than 28 percent. 66000*28%
Abed has determined that he needs a new car. By new he means either brand new or a relatively new "used" car. He has been going through his budget and he thinks he can afford $295 per month as an auto payment. He saw an advertisement on television stating that he can get a no-down payment three-year loan at a 3.9 percent annualized APR. Given this information, what is the maximum loan that he can afford? a. $8,202.08 b. $10,006.95 c. $11,246.87 d. $22,421.80
b. $10,006.95 solving for PV, end of period pmt, PMT=295, FV=0, 36 months
Abed has a PAP with the following split limit coverage: 100/300/50. If he is involved in an accident, which of the following statement is true? a. The maximum amount his insurance will pay to fix or repair damage to his car is $50,000. b. The maximum his insurance will pay in medical expenses, per person, for himself, his family, and those in the other car is $100,000. c. The maximum his insurance will pay, if he is liable in the accident, for medical expenses of one other person in the other car is $100,000. d. Statements a and b are correct.
c
All of the following are examples of qualitative information that should be collected by the financial planner EXCEPT: a. General attitude towards spending b. Risk tolerance c. Client age and number of children d. Education goals
c
Five years ago today, Ron purchased a stock for $45. Over the past five years, the stock has paid the following dividends: $1.25 (year 1), $2.00 (year 2), $2.50 (year 3), $3.25 (year 4), $1.75 (year 5). At the end of the fifth year, the stock is selling for $47. What was Ron's compounded rate of return (IRR)? a. 3.85% b. 4.69% c. 5.52% d. 6.32%
c
If the Shims sustain an $80,000 loss to their dwelling from a fire, how much will the insurance company pay (after the deductible) toward the dwelling loss claim? a. $64,000 b. $68,000 c. $79,500 *have to carry at least 80% of total replacement value d. $80,000
c
In order for Abed to qualify for an excess liability insurance policy, which of the following statements is true? a. He must not have received a speeding ticket within the last year. b. He must own a house and car and bundle the insurance together. c. He must increase his liability coverage on his PAP and HO policies above the state required minimums. d. Each of the statements listed is correct.
c
Jose created a joint bank account for himself and his friend, Amparo. At what earliest point has a gift been made to Amparo? A)When the account is created. B)When Jose notifies Amparo that the account has been created. C)When Amparo withdraws money from the account for her benefit.
c
What will be the result if Sonya decides to cancel her term life insurance policy? a. She will incur a $2,250 tax liability based on the level of premium paid over the past five years. b. She will receive $450 in premium paid for last year's coverage as a refund from the insurance company, and this amount will be fully taxable at the Federal level. c. She will not have a tax liability associated with the cancellation. d. She will incur a tax liability on the face amount received if she were to die after canceling the policy but before receiving refunded premiums.
c
Which of the following best describes the financial approach that provides a visual representation of how a client distributes resources? a. Strategic Approach b. Two Step/Three Panel Approach c. Pie Chart Approach d. Life Cycle Approach
c
Which of the following insurance recommendations will result in a positive cash flow? a. Increasing the amount of current coverage. b. Change name of beneficiary to someone with a better credit score. c. Raise insurance deductibles. d. Purchase a new life insurance policy.
c
Which of the following is most likely to be considered a discretionary cash flow? a. Food b. Tuition c. Netflix Subscription d. Auto Loan
c
Abed has obtained several loan offers from banks, credit unions, and mortgage brokers. Assuming he does not qualify for a VA or FHA loan at this time, which of the following borrowing strategies will enable him to pay the least amount of interest over the course of the loan? Assume the purchase price of the home is $200,000? a. Obtain a thirty-year fixed rate 4.5 percent APR mortgage with a loan to value ratio of 80 percent. b. Obtain a thirty-year fixed rate 4.5 percent APR mortgage with a loan to value ratio of 50 percent. c. Obtain a fifteen-year fixed rate 3.9 percent APR mortgage with a loan to value ratio of 100 percent. d. Obtain a twenty-year fixed rate 4.0 percent APR mortgage with a loan to value ratio of 90 percent.
c 15 year loan will pay less interest, shorter loan=less interest
Jason earns an annual salary of $50,000. His company matches 50% of his 401(k) contributions up to 6% of his compensation (max 3% company contribution). Jason contributed $5,000 to the plan this year and his company made the matching contribution before the end of the year. The balance of his account at year's end was $95,000. What is his savings rate this year? a. 10.0% b. 11.0% c. 13.0% d. 16.0%
c Response Feedback:, $5,000 contributed to his 401(k) plan plus $1,500 (50% employer match, up to a maximum of 3% of compensation) divided by gross pay.($5,000 + $1,500) ¸ $50,000 = 13%
Utilizing investment assets to gross pay benchmarks, which of the following individuals is likely on target with their investment assets? a. Jerry age 55 earns $120,000 a year and has invested assets of $450,000. b. Liam age 25 earns $45,000 a year and has invested assets of $5,500. c. Sarah age 35 earns $90,000 a year and has invested assets of $325,000. d. Alex age 45 earns $110,000 a year and has invested assets of $170,000.
c Response Feedback:, Jerry age 55, needs invested assets of 8-10 times his salary ($960,000).Liam age 25, needs invested assets of 0.2 times his salary ($9,000).Sarah age 35, needs invested assets of 1.6-1.8 times her salary ($144,000).Alex age 45, needs invested assets of 3-4 times her salary ($330,000).
Mila has an investment account with a balance of $125,000. She intends to make withdrawals each year for the next 15 years from this account. If the investment account earns 10%, compounded annually, how much can Mila receive at the end of each year? a. $12,500.00 b. $14,940.20 c. $16,434.22 d. $17,386.16
c Response Feedback:, N = 15i = 10PV = <125,000>FV = 0PMT = 16,434.22
Jamie deposits $10,000 in an account earning 3% interest, compounded quarterly. How much will the account balance be in 7 years? a. $10,176.32 b. $10,724.14 c. $12,327.12 d. $22,879.28
c Response Feedback:, PV = <10,000>PMT = 0N = 28 (7 x 4)i = 0.75 (3 ¸ 4) FV = $12,327.12
Damian invests $5,000 today in an account earning 6% per year. How much is the investment worth in 4 years? a. $5000.00 b. $6,200.00 c. $6,312.38 d. $6,326.60
c Response Feedback:, PV = <5,000>PMT = 0i = 6N = 4FV = $6,312.38
Assume $1,500 is invested for one year earning 9% and the inflation rate during that period is 3%. What is the inflation adjusted rate of return? a. 4.36% b. 4.91% c. 5.83% d. 6.31%
c Response Feedback:, [((1 + 0.09) ¸ (1 + 0.03)) - 1] * 100 = 5.8252%
Jason is saving for a new TV. He currently has $1,200 in his account that earns 3%, compounded monthly, and the new TV costs $4,500. Assuming Jason deposits $100 in his account each month, how many months until his account has enough money to purchase the new TV? a. 24 months b. 29 months c. 31 months d. 33 months
c Response Feedback:, i = 0.25(3 ¸ 12)PV = <1,200>PMT = <100>FV = 4,500N = 31
Based on the front-end mortgage qualification rule, and assuming the Abed goes to the maximum PITI level based on the rule, how much can he afford to borrow? Assume the following: • He currently earns $66,000 per year. • The loan has a 4.5 percent annualized APR. • The loan is a thirty-year mortgage (fixed rate). • $200,000 loan amount. • $150 monthly HO insurance premium. • $300 monthly HO tax. a. $215,124 b. $283,540 c. $303,936 d. $390,775
c solve for pv
How much will the Shims' health insurance company pay if Sonya files a claim for a broken foot that cost $2,000 for emergency room treatment, $700 for bone setting, and $300 in rehabilitation services? **she has a $500 deductible.. insurance pays 80% she pays 20% a. $0 b. $500 c. $2,000 d. $2,500 e. $3,000
c. $2,000 3000-500-20% copay she pays 1000, the companys pays 2000
Tax schedule D
capital gains and dividends
Currently, neither Kevin nor Sonya has disability insurance coverage. Kevin and Sonya would like more information about disability insurance. Which of the following statements is true in relation to disability insurance? I. Shorter elimination periods result in lower premium costs. II. Benefits paid from employer-provided group disability plans are always received income tax free. III. If a guaranteed renewable contract is used, the insurance company cannot increase premiums on individual policies but can raise premiums for all individuals covered by the policy. IV. Disability policies are nearly always designed to provide lifetime benefits. a. I only b. I and II only c. II and III only d. III only e. II, III, and IV only
d
Financial planners may earn compensation in the form(s) of: a. A percentage of assets managed b. An hourly rate or fee c. A commission on investment and insurance products sold d. All of the above
d
Starting today, Armand deposits $100 in a savings account at the beginning of each month. If the account earns 6% annually, what is the account value after 6 years? a. $697.53 b. $739.38 c. $8,640.89 d. $8,684.09
d
Which of the following is most likely to affect a rational investor, as described in Traditional Finance? a. The Disposition Effect b. Overreaction Bias c. Anchoring d. None of the Above
d
Which of the following is not a party to a trust? A)Trustee. B)Income beneficiary. C)Grantor. D)Principal.
d
Which of the following is not a requirement of the unlimited marital deduction? A. In order to claim a marital deduction, the decedent must have been married as of the date of his death. B. The surviving spouse must receive property through the estate. C. The surviving spouse must be a U.S. citizen. D. The gross value of qualifying property left to the surviving spouse is included in the marital deduction.
d
Which of the following is not a transfer cost associated with estate planning? A. Document preparation. B. Attorney's fees. C. CPA's fees. D. Insurance premiums.
d
Which of the following states is not a community property state? A. Arizona. B. Idaho. C. Wisconsin. D. Florida.
d
Your client provides you with her tax returns from the previous year. Identify the stage of the financial planning process in which you as the planner are engaged. a. Analyzing the Client's Current Course of Action and Potential Alternative Courses of Action b. Monitoring Progress and Updating c. Identifying and Selecting Goals d. Understanding the Client's Personal and Financial Circumstances e. Implementing the Financial Plan f. Presenting the Financial Planning Recommendations g. Developing the Financial Planning Recommendations
d
Abed is a collector. Last week he estimated the following values of his collections: 1) Postage Stamps: $3,000 2) Jewelry: $1,000 3) Signed 1st Edition Books: $3,500 4) Silver Coins: $800 Which of these collections needs a personal articles floater? a. Only #3 b. #1 and #2 only c. #2 and #4 only d. #1 and #3 e. All of the items
d only over $2500
If a shed valued at $13,000 in the backyard is also destroyed in the fire, what is the maximum amount that the insurance company will pay, prior to the deductible, to replace the shed and any other detached dwellings? a. $225,000 b. $25,000 c. $21,070 d. $13,000 e. $1,300
d. $13,000 DETACHED STRUCTURES are covered 10% of value of house
During their meeting with you, Johnny and June call the benefits office to adjust their tax withholding to better suit their financial needs. Identify the stage of teh financial planning process in which you are engaged with your client. a. Analyzing the Client's Current Course of Action and Potential Alternative Courses of Action b. Monitoring Progress and Updating c. Identifying and Selecting Goals d. Understanding the Client's Personal and Financial Circumstances e. Implementing the Financial Planning f. Presenting the Financial Planning Recommendations g. Developing the Financial Planning Recommendations
e
Sonya believes that her husband is a reckless driver, and she worries about what will happen if he is ever in a serious car accident. If Kevin is involved in a car accident that causes physical harm to another motorist in the amount of $300,000, how much will be paid from the personal automobile policy (PAP) and how much will be paid from the excess liability policy? a. $300,000 PAP and $0 excess liability. b. $0 PAP and $300,000 excess liability. c. $150,000 PAP and $150,000 excess liability. d. $50,000 PAP and $250,000 excess liability. e. $250,000 PAP and $50,000 excess liability.
e
During your meeting with Jeff, you provide him with three education saving plans to choose from. Identify the stage of the financial planning process in which you are engaged with your client. a. Analyzing the Client's Current Course of Action and Potential Alternative Courses of Action b. Monitoring Progress and Updating c. Identifying and Selecting Goals d. Understanding the Client's Personal and Financial Circumstances e. Implementing the Financial Planning f. Presenting the Financial Planning Recommendations g. Developing the Financial Planning Recommendations
f
True or False: Cara's employer provides $50,000 in group term life insurance as an employee benefit. The cost of the insurance, which is paid by her employer, is exempt from income tax withholding, but not exempt from Social Security and Medicare tax withholding.
false after 50K is going to be taxed
"Which of the following tax items will be included when calculating the Andes' gross income this year? I. Lolita's salary. II. The state tax refund from the previous year. III. The capital loss in United Motor Company. IV. Dividends earned, but not received, on the insurance policy
i and ii
Larry is considering changing jobs. A potential employer has offered him several employee benefits that make the job offer very attractive. Which of the following employee benefit alternatives will help reduce the Andes' reportable gross income for federal income tax purposes if Larry takes the job and signs up for the benefit? I. The immediate right to contribute to a 401(k) plan. II. Employer-provided parking. III. Group term life insurance equal to three times salary. IV. The right to contribute to a Section 125 plan.
i and iv
"Larry and Lolita are considering moving their bank account balance to a safe municipal bond mutual fund. Before making the switch, they should be aware of which of the following? I. Given their federal marginal tax bracket, the bank account provides a higher after-tax yield. II. Interest and capital appreciation from the municipal bond fund is federally income tax exempt. III. Interest from the bonds will be state income tax free if the bonds held in the fund are from the state where the Andes live. IV. Municipal bond interest that is used to reinvest in the fund will grow on a tax-free basis
ii and iii
Tax schedule B
income 1040
Tax schedule E
income tax qualifications, rents and royalties (commercial r.e. all interest can be deducted on loan)
While he was in the hospital, Cyrus told his wife that if he died he wanted to give his fishing tackle to his son, Huck; his golf equipment to his son, Fitz; his truck to his daughter, Olivia; and everything else to her (his wife). Cyrus died the next day without writing anything that he told his wife, but a nurse and another patient were in the room and heard his declarations. What type of will does Cyrus have, if any?
nuncupative
Within a cash flow statement, income can be reported as
passive - not discres.
Tax schedule C
profit/loss self-employment
Tax schedule A
standard deduction or itemizing
True or False: A communication that, based on its content, context, and presentation, would reasonably be viewed as a suggestion a client take or refrain from taking a particular course of action, is considered financial advice.
true
True or False: When interest rates move up, bond values typically fall, with longest maturity bonds falling by the greatest percentage.
true
"Ashley was not clear on all of the estate laws relevant to Mr. Hernandez's situation, so she called an attorney friend who deals primarily with criminal cases to help resolve a few of Bob's questions. Did Ashley violate rules related to planning competence within CFP Board's Code of Ethics and Standards of Conduct?"
yes ,she should have contacted a qualified estate attorney
