Dan Madden, CFP® – Page 52 – Online CFP Program

Corporate Dividend Exclusion

Course: Investment Planning Lesson 3: Equity Securities Student Question: I don’t quite understand the corporate dividend exclusion. A corporation can exclude 70% of dividends from a different company when they own less than 20%. I don’t understand what happens when they own more than 20%. Also, is there a rule preventing companies from investing in…

Systematic Risk

Which of the following statements concerning systematic risk is correct? It can be greatly reduced by owning a diversified portfolio of common stocks. It covers those types of risks that cause all securities to move together in a systematic manner. Business risk, such as a strike at an individual firm, is considered systematic risk. It…

CFP Board Webinar: Roadmap to the New Code of Ethics and Standards of Conduct

As we are all aware, the new Code of Ethics and Standards of Conduct become effective on October 1, 2019. Many CFP® Professionals and those working towards the certification are anxious about what exactly will be changing. In response, the CFP Board will be hosting a webinar dedicated to distilling the essential information about the…

Call Features of Bonds

Which of the following statements concerning the call feature of a bond is not correct? If it is freely callable, the issuer may retire the bond at any time. If it is noncallable, the issuer may retire the bond prematurely by repurchasing it. If the bond carries a deferred call, the issuer may not retire…

Taxable Income to the Employee

An employee is currently in receipt of taxable income in which of the following circumstances? The employer makes an irrevocable, formally funded promise to pay the employee $300 per month for life, beginning at age 65, provided the employee does not terminate service prior to age 65. The employer makes an unsecured promise to pay…

Appropriate Buy-Sell Agreement

Peter and his father Ryan each own 20% and 80% respectively in the RP Partnership. The partnership generates enough income for both partners to be able to afford the life insurance premiums or for the business to be able to pay the life insurance premiums. Which of the following is correct if Peter and Ryan…

Regulation Best Interest Rule and the CFP Board

On June 5, 2019, The Securities and Exchange commission adopted the Regulation Best Interest Rule, along with other rulemakings and interpretations. These actions were designed to enhance the quality and transparency retail investors’ relationships with advisors. Concurrently, the CFP Board has made changes to the CFP Board Code of Ethics and Standards, which become effective…

MEC Income Tax Ramifications

Lauren paid $50,000 for a MEC policy when she was 50 years old. What are the income tax ramifications if she takes a $10,000 loan 5 years after purchasing the policy? The policy was worth $58,000 at the time of the loan. Lauren would not have to report any taxable income or penalty. Lauren would…

Excess IRA Contributions

Course: Retirement Planning Lesson 1: Using IRAs to Build and Distribute More Retirement Income Student Question: Hi Bruce- If an IRA owner over-contributes to his IRA, the owner must remove the excess contribution AND the earning on those contributions by the tax filing date to avoid a 6% tax penalty. However, the 6% penalty tax…

Accelerated Death Benefits

Which of the following individuals would typically qualify for accelerated death benefits under their term life insurance policy? Ida who is expected to die within 7 months from cancer. Jacob who is expected to die within 10 months from AIDS. Kay who is expected to die within 3 months from kidney failure. All of the…