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CFP® Practice Question: Disadvantages of S Corporations
Which of the following statements concerning potential disadvantages of S Corporations is (are) correct? (1) If the business continues to produce losses after the start-up period, the shareholders’ basis in their stock might become exhausted and then additional losses would not be tax-deductible. (2) The receipt of significant amounts of passive income by an S…
Student Question of the Week: Taxation of Life Insurance Proceeds
Student Question from KrishnaCourse: Insurance Planning Student Question: I think I’m missing something w/this concept. I don’t understand how life insurance proceeds would be taxable to the owner’s estate when the beneficiary is someone else? Example: If I am the policy owner and I purchase life insurance on myself and name my sister as the…
CFP Board Online Career Fair
The CFP Board is hosting an online career fair on September 13, from 1-4pm (EDT). This provides a great opportunity to connect with organizations like Northwestern Mutual, Fidelity, Vanguard, and many more. Participants will be connected directly with representatives from organizations for 1-on-1 text-based chats. To learn more about the career fair and register to…
CFP® Practice Question: Includible in Gross Income?
Which of the following is includible in gross income for federal income tax purposes? A. Gift from a grandfather to pay tuition B. A year-end bonus received by an employee, based on business profits C. Excess living expenses received under an insurance contract after a home was damaged by fire D. Interest paid on most…
CFP® Practice Question: Taxation at Parents’ Marginal Rate
Jennifer and Ben have been extremely successful in transferring some of their money to their children over the past several years. The following events took place in the current year: Jan, age 13, earned $1,300 in interest. Bill, age 20 and NOT a student, earned $2,500 in dividends, interest, and capital gains and $1,800 working…
CFP® Practice Question: Inherited Property
Three years prior to Matthew’s death, he inherited property that was taxed in his father’s estate. What percent credit would Matthew receive on this inherited property in his own estate? A. 100% B. 80% C. 60% D. 40% E. 0% CLICK TO REVEAL ANSWER Correct answer is B. Full credit is allowed if the death…
CFP® Practice Question: Reasons for Writing a Covered Call
Which of the following are logical reasons for writing a covered call? (1) To profit when stock prices increase (2) To utilize leverage (3) To provide additional income in a flat market (4) To provide additional gain while disposing of a long stock position A. (1) only B. (1) and (3) only C. (1), (2),…
Student Question of the Week: Skip versus Non-Skip Person
Student Question from David MCourse: Estate Planning Student Question: Hi Dan! Why is Hillary a non skip person in question 1 when she is the granddaughter of Sam and Sarah Parker? Instructor Response: Hi David! Good example of where to be careful on CFP Board exams. While the diagram shows Sam and Sarah at the…
CFP® Practice Question: Duration
Which of the following statements correctly describes duration? A. There is a positive relationship between the coupon rate and duration. B. There is an inverse relationship between the yield to maturity and duration. C. Bonds with shorter durations are more volatile. D. There is an inverse relationship between maturity and duration. CLICK TO REVEAL ANSWER…