Mid-Quarter Depreciation Convention

Course: Income Tax Planning Student Question: Hello, see the question below. I got this question right, but the explanation of why I got it right is weird. I thought mid-month depreciation was only used for real property, and this is saying it is used for equipment. Then, the explanation of the correct answer talks about…

Read More

Loan Impact on Basis in a Modified Endowment Contract

Course: Insurance PlanningLesson 15: Income Taxation of Life Insurance Student Question: Can you help me better understand the difference between policy basis in a normal policy and policy basis on a modified endowment contract. From the Coursework: But for MEC purposes, the basis is increased by any portion of loans that were considered taxable income…

Read More

Annual Return and Compounding

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 of…

Read More

Real Estate Income and IRA Contributions

Course: Retirement PlanningLesson 1: Using IRAs to Build and Distribute More Retirement Income Student Question: This page states that rental income is not included in the definition of earned income.  If the client is a professional real estate developer whose income is derived mainly from rental income, would they be able to contribute to an…

Read More

Donating Short-term Appreciated Securities

Course: Income Tax PlanningLesson 15: Property Transactions Student Question: In the lesson, deducting donations of ‘cash’ versus ‘long term appreciated securities’ are differentiated.  I’m curious about “short term appreciated securities”.  In other words, if I own a stock – bought at $10,000 and it’s worth $50,000 when I donate, but I’ve only owned it 6…

Read More

Passing Property Via Will

Course: Investment PlanningLesson 14: Evaluation Portfolio Performance Student Question: Hello – I’m a little confused about the example (below) discussing an heirloom of only sentimental value. Why would this be titled at all for a will, especially since an earlier lecture said items of no value would pass through will as the situation does not…

Read More

Donating Short-term Appreciated Securities

Course: Income Tax PlanningLesson 15: Property Transactions Student Question: In the lesson, deducting donations of ‘cash’ versus ‘long term appreciated securities’ are differentiated.  I’m curious about “short term appreciated securities”.  In other words, if I own a stock – bought at $10,000 and it’s worth $50,000 when I donate, but I’ve only owned it 6…

Read More

Loan Impact on Basis in a Modified Endowment Contract

Course: Insurance PlanningLesson 15: Income Taxation of Life Insurance Student Question: Can you help me better understand the difference between policy basis in a normal policy and policy basis on a modified endowment contract. From the Coursework: But for MEC purposes, the basis is increased by any portion of loans that were considered taxable income…

Read More

Business Uses of Life and Disability Insurance

Course: Insurance PlanningLesson 17: Business Uses of Life and Disability Insurance Student Question: I have a quick question regarding buy/sell agreement; not clear who would pay the premiums on disability and or life insurance on the principals and the key employees? Instructor Response: Great question.  A buy-sell agreement relates to owners of the business while…

Read More

Solving for Annual Equivalent Rate

Course: Fundamentals of Financial PlanningLesson 5: Using the Calculator Student Question: I am confused as to how to get the correct answer for number 4. Jackie invests her bonus at the beginning of this calendar year. If she earns 7% compounded monthly, what is the annual equivalent rate? Round your answer to two decimal places.…

Read More