Bruce Starks, CPA, CFP® – Page 41

Tax-Deferred versus Tax-Free

Course: Fundamentals of Financial PlanningLesson 6: Educational Savings Techniques Student Question: Hello Dan, I’m working through some of the educational savings vehicles and I see the term tax-deferred and tax-free. But what does each mean? Investment grows tax-deferred. I understand deferred is to pay later, right? My understanding is that it means one does not pay taxes for investment growth. So why is…

SEC Regulation Best Interest – Who is Protected and When?

Good to Know The Security and Exchange Commission’s Regulation Best Interest (Reg BI) is aimed squarely at protecting the best interests of retail investors. A common issue that arises is exactly when Reg BI applies. The short answer is that Reg BI applies when a retail customer receives and subsequently uses a recommendation from a…

Custodial Accounts and Tax Deferral

Course: Fundamentals of Financial PlanningLesson 6: Educational Savings Techniques Student Question: Hi, I am referencing the “Key Information – Coordination with Tax Credits” section. When it says “custodial accounts do not provide income tax deferral,” is this to say that a donor will earn and pay income tax on money received that is then gifted to the beneficiary?Assuming the gift is less than $15,000 annually, there…

Risk Premium versus Intrinsic Value

Course: Investment PlanningLesson 5: Fundamental Equity Analysis Student Question: Hello Bruce, The first Review Exercise page in Lesson 5 – is Intrinsic Value the same as Risk Premium? Is that why we’re solving for P0 and not V (which is given)? The formula provided in the explanation confuses me. (question and answer from Review Exercise below) Review Exercise Question: Given the following information, what…

The Unlikely Banker – IRS CARES for Business Owners

Good to Know THE TREASURY DEPARTMENT PROVIDES MORE THAN SBA LOANS FOR BUSINESS WORKING CAPITAL SBA loans and the Paycheck Protection Program dominated the business headlines over the last few months. But several less-heralded provisions of the CARES Act go beyond recent headlines to shore up cash flows of struggling businesses, too. How? Liberalization of…

CFP® Certificants in the News: Honesty is the Best Policy

“Honesty is the best policy.” -Sir Edwin Sandys, 1599 CFP Board reported automatic interim suspensions on several participants’ right to use the CFP® mark in its April 14, 2020, press release. The CFP Board suspensions were based upon investment license revocations by the State of California and FINRA. Assuming the allegations made by CFP Board are proven, a number of recently-disciplined CFP® certificants…

Qualified Business Income Deduction

Course: Income Tax PlanningLesson 9: Tax Implications of Business Structures Student Question: I’m having a hard time understanding the Qualified Business Income (QBI) deduction for Specific Service Trade or Business (SSTB). A nonqualified business is an SSTB, right? But SSTB businesses can qualify if they are under AGI income phase-out? Does that mean if I am financial advisor and file Schedule C with net income onto…

Don’t Make Any Sudden Moves – CFP Board Practitioner Survey

COVID19, Market Volatility and Staying Calm The author had a Trust client that I will call Mr. B, a decorated former Marine. He built a highly successful business after he left the Marine Corps and eventually sold the business at a favorable valuation. While most of the author’s trust clients were highly stressed by the…

Bond Investment Strategies

Course: Investment PlanningLesson 11: Fixed Income Investment Strategies Student Question: Good morning! This page in the lesson lists the Laddered Approach and the Barbell Approach as popular passive bond strategies. However, in the reading, on Page 312 (Money Education, 2nd edition), the Laddered Approach and the Barbell Approach are listed as active strategies. Can you help me clarify which is correct? Thanks! Kaitlyn Instructor Response:…

Qualified Plan Contributions

Course: Retirement PlanningLesson 2: Qualified Plan Advantages and Disadvantages for Employees and Business Owners Student Question: I understand below is an example, but it is possible to contribute $20k to a retirement fund like a Roth IRA? I thought the limit was $6k. Example:Acme, Inc. contributed $20,000 to Tarzan Smith’s qualified plan in Year 1. Tarzan will never pay Social Security tax or Medicare tax on the $20,000 employer contribution;…