CFP® Practice Question

Erika wants $50,000 a year in today’s dollars in retirement. She anticipates retiring in 10 years and living in retirement for 30 years. Erika can earn 7% on her investments and she expects inflation to average 4%. Approximately how much should Erika have saved by the day she retires to meet this goal? $913,000 $983,000…

Cindy received the following payments from her ex-husband Jim under the terms of the divorce decree: $10,000 of back alimony payments from last year $20,000 of back child support payments from last year $30,000 of alimony payments for this year $40,000 of child support payments for this year How much does Cindy have to include…

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…

Dan and Karen Burles have 2 children, Coy (age 12, student) and Roger (age 21, student). Dan and Karen own a security equipment sales and installation business – an LLC. Dan and Karen are in the highest income tax bracket. They have a portfolio with $130,000 of municipal bonds (annual income $5,200), $80,000 of corporate…

Which of the following tax planning ideas would help Beth the most if she currently has to pay AMT taxes? Pay her $1,000 January mortgage payment before the end of the year. Pay her $2,000 January alimony payment to her ex-husband before the end of the year. Recognize a $3,000 short-term capital gain on her…

April’s husband Jay died 5 years ago when their home was worth $600,000. Due to the soft real estate market, April kept the house until the housing market recovered. She finally sold the home this year for $950,000. What is the amount of April’s taxable gain or loss if she bought the home jointly with…

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 Cape that William identified 60 days after selling his Maine property. An apartment building in California that William identified 90 days after selling his Maine property. A ski cabin in Denver…

Which of the following expenses can Vicki expense entirely under Section 179 expense assuming she meets all other requirements? $10,000 for a new coat of paint in the lobby and office. $20,000 for a new roof on the warehouse $30,000 for vacation $25,000 for new computers CLICK TO REVEAL ANSWER Expand D is the answer.…

Bill Farmer bought 1,000 acres of farmland for $300,000. When his oldest son married, Bill gave him 400 acres for a farm. When Bill died this year, the remaining 600 acres were divided in Bill’s will between his two younger sons. The 600 acres had a fair market value at Bill’s death of $600,000. Which…

Assume that, of the 100 employees eligible for participation in G Company’s qualified pension plan, 20 are highly compensated employees and all 20 participate. What is the minimum number of G Company’s non-highly compensated employees that must participate in G Company’s qualified pension plan to meet the ratio percentage test? 20 50 56 70 CLICK…