Bruce Starks, CPA, CFP® – Page 49

Alimony Recapture

Course: Income Tax Planning Lesson 4: Calculating Total Income Student Question: So, if I’m understanding this correctly, alimony recapture should no longer be an issue in 2019 and beyond due to alimony no longer being deductible, correct? Instructor Response: Hi Lafe, Good question. Alimony paid under a divorce decree executed before 1/1/19 will continue to…

Beta as a Measure of Risk

Course: Investment Planning Lesson 1: Key Principles of Investing Student Question: Hi Dan- I don’t understand why this statement is true: “Beta is a measure of systematic, non-diversifiable risk.” I thought Beta was a measure ofrelative volatility? This is from a Board-Related Question in “Measures of Investment Risk” in “Principles of Investing”. Craig Instructor Response:…

The 20% Qualified Business Income Deduction – Congress Denies the Deduction to Certain Successful Business Owners

In Part 1 of this 4-part series, we introduced the extraordinary power of the Qualified Business Income (QBI) deduction to slash your business owner client’s taxes by as much as 20%. We ended Part 1 with a heads-up that restrictions apply. We’ll take a close look at a key restriction in this article – Part…

Saving Taxes for Shareholders – Buy/Sell Agreements: Stock Redemption vs Cross Purchase

Course: Insurance Planning Lesson: 17 – Business Uses of Life and Disability Insurance Student Question: Under the Stock Redemption Method – how is basis treated specifically to stock remaining outstanding (not Treasury stock) and how does this compare to the Cross Purchase Method? Is basis treated the same – do both methods provide the same…

Good to Know: Claiming Dependents – Waste of Time or Great Way to Save on Income Taxes?

We lost the deduction for personal and dependency exemptions starting in 2018 under the Tax Cuts and Job Act. With the loss of the deduction, many taxpayers rightly ask, “Should I even bother documenting and claiming my dependents on my tax return?” That a reasonable question and the answer is… YES for many taxpayers. Claiming…

Mortgage-Backed Bonds and Mortgage Pools

Student Question: Course: Investment Planning Lesson 9: Fixed Income Securities I don’t clearly understand how money is made in the mortgage-backed bond process. What are mortgage pools? Does the investor make money from the interest of the pooled mortgages? What if the mortgages default? Thanks, Kevin Instructor Response: Great question. Here’s a quick example: John Doe…

Medical and Charitable Travel Mileage Deductibility after 2017

Course: Income Tax Planning Lesson 8: Arriving at Taxable Income Student Question: Hi – I know that the Miscellaneous Deduction has been suspended; therefore, reimbursed employee mileage is no longer deductible. Can individuals still deduct mileage related to medical and charitable travel? If so, how is this deduction taken? Thanks! Justin P Instructor Response: Hi Justin, Good question…

Good to Know: Should you Convert to a C Corporation for the 21% Tax Rate?

Conventional wisdom says that sole proprietorships, partnerships, Sub-S Corporations and certain LLCs (“pass-through” business structures) should strongly consider converting from their present business form into a C Corporation (C Corp). Why? The 21% C Corp income tax rate from the Tax Cuts and Jobs Act can be seductive, especially when personal income tax rates can…

Student Question of the Week: Market Risk Premium

Student Question from AlisonCourse: Investment Planning Student Question: Can you help explain this question better? If the market risk premium were to increase, doesn’t that mean the amount of compensation and investor desires would increase, so the value of stock would need to increase further? Board Released Question If the market risk premium were to increase, the value…

Why Become a CFP® Certificant?

The Financial Planning profession is expected to grow dramatically in the near term according to a recent CFP Board newsletter. The Board expects the need for personal financial advisors to shoot up by some 41% in the near term and continue leading the average occupation growth through 2020. If you are currently practicing as a…