Blog
Beta as a Measure of Risk
Course: Investment PlanningLesson 1: Key Principles of Investing Student Question: In the CFP Board question below I’m wondering why (1) is part of the correct answer. How is beta a measure of systematic, non-diversifiable risk? On the page, it talks about how beta is a measure of risk for a security compared to the overall…
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Like-Kind Exchange
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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Clients Are Not Locked Into High-Tax States
CFP® Certificants in the News encourages membership in the Financial Planning Association. Later in this article, we will reference a highly topical article appearing in the Journal of Financial Planning. We will feature a strategy that high-income clients can use to slash their state income tax rates in this report. But first, let’s admit that…
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Pre- and Post-1987 After Tax 401(k) Contributions
Course: Retirement PlanningLesson 7: Income Distribution Planning for Qualified Plans Student Question: Regarding the after-tax example: Wouldn’t the full $10,000 hardship come first from the $80,000 that was contributed pre-1987? Don’t you exhaust the $80,000 before concerning yourself with the exclusion ratio? From the Course: Once the pre-1987 after-tax contributions have been withdrawn, or if none existed,…
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Various 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…
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Taking Advantage of Down Markets
Good to Know A decorated marine combat veteran and friend of the author once compared being under enemy attack to corrections in the stock market. His advice was to “stay in your foxhole when the bombs are falling and make no sudden moves.” While many would completely agree with this Marine’s timeless advice, others would…
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Crummey Powers
Course: Insurance PlanningLesson 16: The Irrevocable Life Insurance Trust Student Question: Must Crummey powers always be in effect to apply the annual gift tax exclusion in order to transfer to an irrevocable trust? Or is it the case that as long as it was done once, will all transfers be eligible for the annual gift tax exclusion?…
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Carryover of Losses
The following information has been provided by a client for income tax purposes: $45,000 salary from an S corporation where the client is a vice-president $3,500 loss from the S corporation $1,500 loss from a 3% interest in a limited partnership $1,200 loss from a 10% interest in Middletown Partnership in which the client does…
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Center for Financial Planning Exceeds $1 million in Scholarships
CFP® Board Updates The CFP Board announced in June that the Center for Financial Planning has surpassed $1 million is scholarships. This incredible milestone brings the Center to a total of 225 scholarships awarded. What makes these scholarships so special is that most are focused on students in underrepresented populations in financial planning, continuing the…
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