Posts by Dan Madden, CFP®
CFP Board Requests Comments on Revised Standards
CFP® Board Updates The CFP Board recently announced they are asking for comment on the revised Sanction Guidelines and Fitness Standards. The CFP Board and its board members encourage comments to ensure the proposed revisions echo feedback and insights from CFP® Professionals. The proposed revisions are based on a comprehensive review of the Sanction Guidelines…
Read MoreCalculating Required Insurance
Course: Insurance PlanningLesson 6: Commercial Property and Liability Insurance Student Question: Would you please help me understand where the 97.2% insured calculation is coming from on review question #2 below? The answer states the the building is 97.2% insured and I am having trouble understanding how that was calculated. Peter purchased an apartment building for…
Read MoreSolving for Bond Yield
An investor bought a bond at par that matures in 10 years. The bond pays an annual coupon of $110 and the reinvestment rate is 7%. What is the realized compound yield of this bond? 7.23% 8.01% 9.67% 14.10% CLICK TO REVEAL ANSWER Expand C is the answer. One would anticipate a realized compound yield…
Read MoreLoan Impact on Basis in a Modified Endowment Contract
Course: Insurance PlanningLesson 15: Income Taxation of Life Insurance Student Question: Can you help me better understand the difference between policy basis in a normal policy and policy basis on a modified endowment contract. From the Coursework: But for MEC purposes, the basis is increased by any portion of loans that were considered taxable income…
Read MoreRental Property Like-Kind Exchange
William found someone to buy his rental property in Maine. Which of the following properties William would like to purchase as rental property would allow him to complete a like- kind exchange? A golf course rental property in Arizona that William identified 30 days after selling his Maine property. A beach rental house at the…
Read MoreAnnual Return and Compounding
Course: Fundamentals of Financial PlanningLesson 5: Using the Calculator Student Question: My question relates to being able to clearly distinguish when the CFP Board exam will require an annual, or other period for the answer.Question 5(b) asks: “What is the rate of return on Investment 2 using daily compounding?” What is the annual rate of…
Read MoreVarious Sources of Income
A client received an annual salary from his employment of $40,000. He was a 50% owner of both a C corporation and an S corporation. The C corporation had net profits of $20,000, and the S corporation had income of $10,000. Neither corporation made a distribution. The client’s revocable trust had income of $5,000 but…
Read MoreAppropriate Valuation Method
Sam McBuck has an estate of $10 million and would like to leave it to his nephews. Sam assumes he will live for at least 5 more years. The property in Sam’s estate currently includes the following assets: An apartment building in downtown New York that Sam owns with three partners, each of whom wants…
Read MoreReducing the AMT
Which of the following tax planning ideas would help Beth the most if she currently has to pay AMT taxes? Pay her $1,000 January mortgage payment before the end of the year. Pay her $2,000 January alimony payment to her ex-husband before the end of the year. Recognize a $3,000 short term capital gain on…
Read MoreCFP Board Announces Elizabeth Miller as 2024 CFP Board Chair-Elect
CFP® Board Updates In July, the CFP Board announced Elizabeth Miller, CFP® as its 2024 Chair-elect. She has previous experience with the CFP Board as a Board Director in 2020 and is a member of CFP Board Center for Financial Planning’s Campaign Development. Liz Miller, CFP®, CFA®, is the founder and President of Summit Place…
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