CFP® Practice Question

In 2026, a client donates publicly traded stock held for more than one year to a qualified charity. The stock has a fair market value of $50,000 and a cost basis of $12,000. Which of the following statements is CORRECT? The client may deduct only the $12,000 cost basis The client recognizes a $38,000 capital…

James (age 66) retires in 2026 and is evaluating how to fund his living expenses. He needs $80,000 after tax this year. His available assets include: Traditional IRA: $1,000,000 (all pre-tax) Roth IRA: $200,000 Taxable brokerage account: $300,000 (basis $200,000) Assume: Ordinary income tax rate: 24% Long-term capital gains tax rate: 15% No Social Security…

In 2026, a married couple makes a gift of $60,000 to their adult child. They elect to split the gift. How much of the gift will be considered a taxable gift?   $0 $22,000 $41,000 $60,000 CLICK TO REVEAL ANSWERExpandB is the answer.   In 2026, the annual gift tax exclusion is $19,000 per donor.…

Which of the following bonds would be MOST sensitive to changes in interest rates? A 2-year Treasury bond A 5-year corporate bond A 10-year municipal bond A 30-year Treasury bond CLICK TO REVEAL ANSWERExpandD is the answer.   Interest rate risk increases with longer maturities. A 30-year bond has the greatest duration and will experience…

A client withdraws $30,000 from her Roth IRA in 2026. The account consists of $20,000 in contributions and $10,000 in earnings. She is age 45 and does not meet any exception to the early withdrawal penalty. How will the $30,000 distribution be treated for tax purposes? Entire amount is tax-free and penalty-free Contributions are tax-free;…

A CFP® professional is evaluating a client’s life insurance needs using the capital needs analysis approach.  Which of the following would be classified as a capital need rather than an income need?  Monthly living expenses for surviving family members Future college education costs for children Mortgage payoff at death Replacement of the client’s salary CLICK…

A client turns age 73 in 2026 and must begin taking required minimum distributions (RMDs) from her traditional IRA.  Which of the following statements is CORRECT regarding her first RMD?  It must be taken by December 31, 2026 It may be delayed until April 1, 2027 It is not required until age 75 It can…

An employee pays premiums for an individual disability income insurance policy with after-tax dollars. The employer does not contribute to the policy.  If the employee becomes disabled and begins receiving benefits, how will the benefits be taxed?  Fully taxable as ordinary income Partially taxable based on employer contributions Tax-free Subject to capital gains tax rates…

In 2026, a married couple filing jointly has taxable income of $90,000, which includes $10,000 of long-term capital gains.  What federal tax rate applies to the $10,000 of long-term capital gains?  0% 15% 20% Ordinary income tax rates CLICK TO REVEAL ANSWERExpandA is the answer For 2026, the 0% long-term capital gains threshold for married…

In 2026, a client has a 529 plan for her daughter that has been open for 20 years. The beneficiary has graduated college and does not need the remaining funds. The account balance is $60,000, all attributable to contributions and earnings made more than five years ago. The client is considering rolling funds from the…