Blog

Possible Penalties on Tax Return

By Dan Madden, CFP®

Terry received a notice from the IRS correcting a math error on his individual income tax return. As a  result, Terry owes $1,000 in taxes,   penalties and interest. Which of the following is the most likely penalty or interest assessed against Terry? Understatement penalty Failure to file penalty Fraud penalty Underpayment penalty CLICK TO REVEAL ANSWER Expand D is the answer.…

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How Financially Resilient Were Americans During the Pandemic?

By Bruce Starks, CPA, CFP®

CFP® Certificants in the News You may be surprised by some of the conclusions drawn about our financial resilience as a nation according to an article posted in CFP Board’s FINANCIAL PLANNING REVIEW dated May 12, 2022. We’ll frame this discussion in three parts: Context, Methodology, and Findings. Context According to the article, “the economic…

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Annual Return and Compounding

By Dan Madden, CFP®

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…

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Using Jensen Performance Index

By Dan Madden, CFP®

Based on the Jensen performance index, which fund should the investor continue to hold given the following information? Fund 1 Fund 2 Return on Portfolio 13% 17% Beta .95 1.02 Standard Deviation .18 .22 Risk free rate of return is 7% Market return is 15% Fund 1 Fund 2 Both Fund 1 and 2 Neither…

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Social Security Survivorship Challenge

By Bruce Starks, CPA, CFP®

Good to Know It’s been said that there are two kinds of CFP Board exams-those that test Social Security moderately and those that test it heavily. From a larger perspective, CFP Board tells us that almost one of every five questions on the average exam will test the examinee’s knowledge of the Retirement Savings and…

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Social Security Widower Benefits

By Bruce Starks, CPA, CFP®

Course: Insurance PlanningLesson 10: Social Security Student Question: When it comes to social security widower’s benefit’s, is the widow eligible to take his/her SS benefit early  (age 62) and then switch over to the deceased spouse’s full benefit at 67? Or would the widow only be eligible for one of the two benefits? Instructor Response: You are directionally correct. Note that a qualifying surviving spouse can generally receive widow or widower’s benefits beginning at age 60, age 50 if disabled, or before age 60 if caring for an eligible child of the deceased worker. Specific to your question, here’s general guidance straight from Social Security: If you [the surviving spouse] are also eligible for retirement benefits (but haven’t applied yet), you have an additional option. You can apply for retirement or survivors benefits now and switch to the other (higher) benefit later. Caveat – like any general guidance, there are exceptions.

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Like-Kind Exchange

By Dan Madden, CFP®

William found someone to buy his rental property in Maine. Which of the following properties that 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…

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CFP Board Announces 2022 Academic Research Colloquium Conference

By Dan Madden, CFP®

CFP® Board Updates The CFP Board and the Center for Financial Planning have announced the dates for the 2022 Academic Research Colloquium for Financial Planning.  The conference will be held at the Conrad Washington, DC on October 24th and 25th, 2022. The Colloquium, which is an initiative of the Center for Financial Planning, is a…

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Interest Rate Risk in a Bond

By Bruce Starks, CPA, CFP®

Course: Investment PlanningLesson 10: Fixed Income Securities Analysis Student Question: I’m not clear why holders of long-term bonds are subject to interest rate risk. If a 20-year bond is purchased at par with a coupon rate of 6.25% ($62.50/year), it seems to me that the investor would still receive $62.50 a year regardless of interest rate changes. What…

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